Monday, March 29, 2010

More love for Viacom (VIA.b)

Viacom (Via.b) shares are up  a bit this morning, after Barrons profiled the company over the weekend.  Shares are also benefiting from a Morgan Stanley upgrade.  The firm raised their target to $37 from $33, which is still below the mid-$40's that I think the shares are worth.

Shares are up nicely since I wrote about Viacom's huge boost thanks to "Snooks and the Sitch" from MTV's breakout hit Jersey Shore on February 13th - but then so is the broad market.  These lovable jackasses are having a demonstrable effect on MTV's viewership, and will result in better ad rates for Viacom's cable channels.

"I'm above the street with my 2010 and 2011 estimates for earnings and free cash flow, but I can say that with an appropriate 8% Free Cash Flow Yield, Viacom B shares should trade above $40 versus $28.90 right now.  Lots of upside here."  -- AlphaNinja 2/13/2010

In their weekend profile, Barrons mentioned that the market is effectively pricing in the company's long-suffering Paramount division at zero, based on comparable media valuations.

Copyright 2010 AlphaNinja

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