ViacomCBS resumes slide; MoffettNathanson downgrades to "sell"

Paramount Global

25/03/2021 16:53

(Updates. Adds brokerage downgrade, commentary)
    ** ViacomCBS Inc shares  VIAC.O  fall as much as 5.4% to
$66.25 on Thurs and on track to fall for third straight session
    ** VIAC on Weds plunged 23% for worst decline ever after co
sold 20 mln shares at $85 alongside $1 bln convertible preferred
offering  urn:newsml:reuters.com:*:nL1N2LM16S
    ** Research firm MoffettNathanson on Thurs cut rating on
VIAC to "sell" from "neutral", and reduced PT by $12 to $55,
implying ~22% downside to stock's Weds close
    ** Stock had run too fast, Michael Nathanson wrote in note,
but said co "appropriately took advantage" by raising capital to
"help clean up their levered balance sheet and accelerate
streaming investment"
    ** However, as more premium content is shifted to
direct-to-consumer (DTC) platforms, Nathanson says, the media
industry runs risk of both higher cord-cutting and greater
viewer erosion
    ** Looking at linear to DTC economic trade longer-term for
VIAC, "we are left questioning how this will end up as a good
trade," he added
    ** Now, of 27 covering analysts, 4 rate VIAC 'buy' or
stronger, 11 have 'hold', while 12 recommend selling the stock;
median PT is $55 (Refinitiv data)
    ** Even with recent weakness, non-voting Class B shares are
up ~80% YTD and have risen about seven-fold from their
pandemic-induced lows last March
    ** Stock surged this year on increased appetite for value
names, newly launched streaming services and an unwinding of
bearish investor bets amid Reddit-fueled trading frenzy
 urn:newsml:reuters.com:*:nL1N2LF25R
    ** Short interest in VIAC shares stood at ~19% of float as
of March 15, per Refinitiv data

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper.tr.com@reuters.net
lance.tupper@tr.com 1-332-219-1430))