Barclays raises CBS estimates


With CBS Corporation due to report its Q1 financial results on May 5th, Barclays Capital analyst Anthony DiClemente has raised his earnings expectations. As a result, he’s boosted his target price for the stock by a buck to $18.

“We like CBS’s newfound balance sheet strength, longer-term fees for the network, and judicious moves like the NCAA deal. But with the stock price reflecting the already strong ad market, with a premium EPS multiple, and without return of capital to shareholders right now, finding the right entry point is key,” the analyst said in a note to clients.

Here are the key points cited by DiClemente: The ad market is improving; The NCAA basketball deal improves “March Madness” profitability in 2011 and beyond; and CBS has long-term upside from growing retransmission consent fees.

For Q1, the Barclays analyst is now expecting CBS Corp. to post earnings per share of four cents, a penny more than his previous estimate. For all of 2010 he’s raised his EPS estimate by two cents, to 97 cents.

As for Q1 revenues, DiClemente is expecting the Content Group to grow by 10.5%, with Entertainment (primarily the CBS TV Network) up 12.4%, Cable Networks up 7.3% and Publishing down 5%. The Local Group is expected to grow revenues by 9.1%, with Local Broadcasting (TV and Radio) up 15.8% and Outdoor flat. All in all, that works out to 10.3% revenue growth for CBS Corporation to $3.84 billion.

Adjusted OIBDA (operating income before depreciation and amortization) is projected to jump 35.2% for the quarter to $337.6 million. That comes from a modest 0.2% improvement from the Content Group and a 107.2% improvement by the Local Group.