Viacom stock may have closed up two cents, to $40.51 yesterday, but one analyst is so bearish on the company that he has declared, “If it could have gone wrong, it did.”
Following the release of Viacom’s Q3 results on August 4, MoffettNathanson senior analyst Michael Nathanson slashed his estimates “as part of the endless story of negative earnings revisions.”
At the time, he asked what could get worse.
With yesterday’s announcement that interim CEO Tom Dooley is exiting on November 15, coupled with the news that a 50% cut in its quarterly dividend, to 20 cents, Nathanson sadly states that we have our answer.
“Every driver of EPS growth (U.S. affiliates, advertising, ratings, SVOD, buybacks and film) declined massively worse than expected,” Nathanson writes.
The dividend chopped in half and Dooley heading out the door was only half of Nathanson’s complaints. With Viacom no longer pursuing a minority investor for its beleaguered Paramount Pictures and a Q4 2016 EPS estimate now expected to be between 65 and 70 cents a share (compared to Nathanson’s prior estimate of 90 cents), 2016 is a “heinous year” for Viacom.
For fiscal 2016, Nathanson now estimates earnings per share of $3.65 – some 33% lower than fiscal 2015. This led Nathanson to further slam Viacom for the “disaster” that is Paramount.
Could the troubles for Viacom continue into fiscal 2017? “While it is safe to say that it is unlikely that these factors will repeat in fiscal 2017, the path to EPS growth still looks challenging,” he says.