Viacom (VIAB) Stock Slumps on Ratings Downgrade
NEW YORK (TheStreet) -- Shares of Viacom (VIAB) - Get Report are retreating 1.08% to $44.71 in pre-market trading on Monday after Wells Fargo downgraded the stock to "underperform" from "market perform" in a note released earlier today.
"We know this is currently trading on corporate governance 'events,' but we don't see how anyone can come in and successfully turn this company around over the next 12 months," the firm wrote in a note.
The entertainment giant has fallen "too far too fast," particularly in cable networks, Wells Fargo contended.
The firm said it "significantly cut" numbers as Viacom struggles to negotiate certain Subscription Video-On-Demand contracts. Additionally, the repricing of the T-DTV deal "was tougher than we thought," and Comcast (CMCSA) placed Viacom's Spike network on a lower tier, Wells Fargo said.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
Viacom's strengths such as its compelling growth in net income, expanding profit margins and notable return on equity are countered by weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: VIAB
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.