Deutsche Bank Downgraded Viacom


Aug. 18 2020, Updated 6:30 a.m. ET

Viacom downgrade

On November 23, 2015, StreetInsider.com (VIAB)+to+Hold/11098658.html">reported that Deutsche Bank downgraded Viacom (VIAB) to “hold” from an earlier “buy” rating. Deutsche Bank kept its price target unchanged at $56. A Deutsche Bank analyst, Bryan Kraft, stated that the downgrade was a result of Viacom stock’s price rising by 25% in the past three months. As a result, it’s within $4–$5 of its price target.

[marketrealist-chart id=852459]

In comparison, as the above chart shows, Walt Disney’s (DIS) stock price only rose by ~12.3% in the past three months. The SPDR S&P 500 ETF (SPY) tracks the S&P 500. It only rose by 5.1%.

It’s interesting to note that while Viacom’s stock price rose in the past three months, the company’s stock price took a beating in its YTD (year-to-date) performance. The stock price fell by 32%. In comparison, Disney’s stock price rose by 22.2% while SPY rose by ~2% YTD.

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Reason for the downgrade

Bryan Kraft discussed the reason for the downgrade. He said that “While Viacom’s valuation multiples still constitute the low end of the sector range, we think this will persist given our projected growth outlook, which is lower than the rest of the media companies for structural reasons. Specifically, we think general entertainment non-sports/non-live event advertising has been in decline for the industry, and this trend will continue, while Viacom lacks sports to offset the impact. Further, we think Viacom’s affiliate growth outlook is lower than others’ because it has less tent-pole programming and no sports.”

In the next part of the series, we’ll look at Viacom’s ley growth drivers. We’ll gauge where Viacom stands concerning its competitors in the media industry.

Viacom accounts for 0.33% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also holds 12.6% of Apple (AAPL) and 8.1% of Microsoft (MSFT).


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