Credit Suisse Downgrades ViacomCBS After Stock Rally

ViacomCBS Inc’s VIAC stock has climbed 91% over the last three months versus a 12% gain for the S&P 500 index, and it now reflects more than the company’s upside potential, according to Credit Suisse.

The ViacomCBS Analyst: Douglas Mitchelson downgraded ViacomCBS to Underperform and raised the price target from $28 to $37.

The ViacomCBS Thesis: There have been improvements in the TV advertising market and in TV subscribers, while management has made efforts to “offset secular headwinds and perhaps create net value through building and expanding streaming platforms,” Mitchelson said in the downgrade note.

Although ViacomCBS may report “continued recovery-boosted results the next few quarters, shares have more than captured appropriately risk-discounted upside potential, suggesting an Underperform rating is appropriate until valuation has normalized,” he added.

The company’s success in relaunching its Paramount+ subscription service and its ability to “find enough success in a crowded global streaming marketplace to offset linear revenue declines after the COVID recovery” will be a key driver of the stock, the analyst added.

VIAC Price Action: Shares of ViacomCBS were down 9.66% at $50.59 ahead of the close Thursday. 

Photo: ViacomCBS, CBS All Access, via EPK.TV.