Up 160% In 2021, Is ViacomCBS Still A Buy?

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ViacomCBS (VIAC) managed to bounce back from its pandemic lows thanks to its strong financials and its launch of several new programs. However, can the launch of its subscription streaming service, Paramount Plus, differentiate the company from other service providers in a crowded streaming services space and bolster its fortunes? Let’s find out. Read on.

 ViacomCBS (VIAC - Get Rating) is one of the top players in the media and entertainment space. It operates through its CBS, Showtime Networks, Nickelodeon and MTV brands, among others. The stock has rallied 159.7% so far this year to close yesterday’s trading session at $96.76. However, it is currently trading 5.1% below its 52-week high of $101.97, which it hit on March 15.

Over the past few years, VIAC has focused mainly on delivering premium content to its audiences worldwide via television or cable networks.  It launched subscription streaming service Paramount Plus on March 4 to capitalize on a growing demand for streaming services. But it is expected to face intense competition from top players in this space. So, we think its near-term prospects are uncertain.

Here are the factors that we think could influence VIAC’s performance in the coming months:

Favorable Recent Developments

The National Football League (NFL) has signed long-term distribution deals with several major streaming services providers including VIAC. The new agreements begin with the 2023 season and run through the 2033 season. VIAC’s Nickelodeon received the go ahead  on March 19 for its two new creator-driven 2D-animated series — ZJ Sparkleton (working title) and The Hamster Show (working title). Nickelodeon Studios has also started production on a new original series for Paramount Plus based on the hit sitcom iCarly. It is expected to be launched this summer.

Robust Financials

VIAC’s global streaming and digital video revenue increased more than 71% year-over-year to $888 million for the fourth quarter ended December 31, 2020. This  was driven primarily by a 74% year-over-year increase in streaming subscription revenue and 69% rise in streaming advertising revenue. Also, the company’s non-GAAP EPS came was  $1.04 for the quarter, up 14.3% sequentially. In fact, VIAC has surpassed  consensus EPS estimates in each of the trailing four quarters.

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Maniacal Monopolier 2 weeks ago Member's comment

How can you claim Wall Street analyst expect this to decline to 45 per share? Why are some of us on here the only ones doing real financial math? I guess it’s the same reason why I still hold all my shares while reading all the negative articles from last year.