CBS Surges: What Wall Street's Saying

NEW YORK (TheStreet) --Shares of CBS (CBS) shares surged 4.1% to $64.38 after the content giant posted fourth-quarter results that beat Wall Street expectations, announced a $1.5 billion accelerated share repurchase program and said it would spin off its billboard business by the end of March.
 
For the quarter ending Dec. 31, CBS earned 78 cents per share, excluding charges, on $3.91 billion in revenue, up 6% from the year ago quarter. Analysts were expecting CBS to earn 76 cents per share on $3.82 billion in revenue.

Regarding the company's outdoor billboard business, CBS said it plans to turn the unit into a real estate investment trust by the end of March, as investors continue to be hungry for yield. Typically, real estate investment trusts pay high dividends.

 
CBS also announced it raised $1.6 billion in new debt, much of what will go towards the company's new buyback program.
 
"The $2 billion of our share repurchase program that we plan to spend in the first quarter is nearly the same amount as our total share buyback program in 2013," said Leslie Moonves, President and CEO of CBS Corporation, in a press release. "Returning value to shareholders is a top priority at CBS. And these actions underscore the great confidence we have in our future as we continue to evolve into a company that is more reliant on fast-growing, non-advertising revenue streams."

Following the report, many Wall Street analysts were positive on the company. Here's what a few of them had to say:

Deutsche Bank analyst David Bianco (Buy, $72 PT)
 
"We expect CBS will buy back 25+% of its stock the next 2 yrs, including the $2b being purchased in 1Q14 (5.4%). Long-term growth remains compelling  with mgmt guiding $2b of retrans in 2020, up from $500m in 2013 (at 100% margin, a 45% boost from 2013 EBITDA base, or 5.5% EBITDA CAGR from retrans alone). Also, SVOD and syndication continues to broaden, with more buyers in the U.S. and Int'l, and meaningful content yet to sell."

UBS analyst John Janedis (Buy, $73 PT)

"The call was fairly bullish, in our view, with mgmt reiterating a strong syndication pipeline for '14 and beyond through its multi-platform strategy (see our 2/10/14 note: "Putting the Pieces in Place for '15 & Beyond"), and announcing its expectation to double retrans/ reverse comp revenue from $1B in '16 (UBSe: $1.1B) to $2B by YE2020. CBS also announced a $1.5B accelerated stock repurchase (ASR) program, on top of another $500M of share repurchases to be completed by early 2Q. Our '14E EPS is largely unch. at $3.46 vs. prior $3.43. Our '14E OIBDA is now $3.79B vs. our prior $3.82B. CBS remains a top pick for '14 and we reiterate our Buy rating on the stock."

-- Written by Chris Ciaccia in New York

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