NEW YORK (TheStreet) -- Shares of CBS (CBS) are climbing 0.28% to $61.82 in Wednesday's early morning trading session after analysts at Credit Suisse initiated coverage today with an "outperform" rating and a price target of $85.
This media company was one of the firm's top picks, along with Time Warner (TWX), that controls the best studios and networks, has the best strategy for exploiting its content in the online video ecosystem, and has low "legacy risk" in the traditional ecosystem, according to the analyst note.
Analysts are bullish for several reasons: superior positioning, given limited exposure to generalist cable networks, a positive view on advertising, where they think modest growth is likely this year, and analysts do not see a material long-term shift from TV to digital.
Over the last five years, the company has improved significantly, the firm noted.
Separately, TheStreet Ratings team rates CBS CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CBS CORP (CBS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 38.80% is the gross profit margin for CBS CORP which we consider to be strong. Regardless of CBS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.25% trails the industry average.
- CBS CORP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CBS CORP reported lower earnings of $2.39 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($3.57 versus $2.39).
- CBS, with its decline in revenue, slightly underperformed the industry average of 3.8%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Even though the current debt-to-equity ratio is 1.21, it is still below the industry average, suggesting that this level of debt is acceptable within the Media industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.17 is sturdy.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Media industry and the overall market, CBS CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- You can view the full analysis from the report here: CBS Ratings Report