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Why Analysts Recommend a ‘Hold’ for Viacom Stock

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Viacom’s ratings

Out of the 27 analysts covering Viacom (VIAB), nine analysts have rated the stock a “buy,” and only one analyst has given the stock a “sell” rating. 17 analysts have rated the stock a “hold.” Analysts have set a target price of $34.58 for the stock and a median consensus estimate of $33.50. Viacom is now trading at a 24.4% discount to its consensus median target estimate.

Viacom posted better-than-expected earnings in the first quarter. The contract renewal agreement with AT&T (T) is also expected to drive consistent earnings for Viacom.

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Viacom’s deal with Netflix

During the first quarter, Viacom, through its Nickelodeon kids division, had announced a film production deal with Netflix (NFLX) to produce more shows and movies. Nickelodeon plans to produce films including The Loud House and Rise of the Teenage Mutant Ninja Turtles, which are based on hit TV franchises. The deal follows Viacom’s earlier multi-picture agreement with Netflix amid efforts to attract viewers to Viacom channels.

Viacom and CBS (CBS) are aggressively making efforts to offer original content to other distributors amid the rise of streaming services that has shaken up the traditional US cable industry. Viacom has also recently completed the $340-million purchase of Pluto TV amid plans to build an international advertising-supported streaming TV service.

While AT&T’s WarnerMedia and Walt Disney (DIS) are planning to launch their streaming service in late-2019, Comcast (CMCSA) is planning to launch its service in early 2020.

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