Stifel Nicolaus analysts on Monday lowered their rating on Viacom shares from “buy” to “hold” and slashed their target price on the company’s stock from $49 to $38.
It’s the latest bad news from Wall Street financial observers for the troubled media company, which received a “hold” rating from Loop Capital on August 29. Loop set a $46 target price.
The consensus among analysts is a “hold,” but the consensus target price is $49.
That’s what makes Stifel Nicolaus’ downgrade so noteworthy.
According to Bloomberg News, the steep dip in Viacom’s target price from Stifel is directly related to its unwillingness to spin off Paramount Pictures.
In a note to clients, Stifel analyst Benjamin Mogil said retaining Paramount “creates near-term challenges,” although keeping it may be a good long-term decision.
“Not only would such a sale provide the company capital to increase its programming investments and potential adjacent digital M&A, but the values being ascribed to the studio (in the $7 billion to $9 billion range) made the core media assets, despite the challenges, appear under-valued,” Mogil said in the client note. “With that sale potential now gone, we view the stock as fairly valued.”
According to Mogil, it won’t be surprising to see Viacom slash its dividend by more than 50%.