Deutsche Bank predicts this media company could become the next big streaming giant

Top line

Deutsche Bank analysts named media and entertainment giant ViacomCBS as the top stock pick for 2022, arguing that it is trading at a much lower valuation than its rivals and predicting the company could become the next big streaming giant thanks to a huge library of content.

Highlights

Deutsche Bank recently upgraded ViacomCBS to a ‘buy’ rating, raising its target price for the share to $ 43 per share, implying a rise of almost 23% from Monday’s price of about $ 35 per share.

The company points out that ViacomCBS, which is “more successful in streaming” as it now spends billions of dollars a year on content, is still significantly undervalued compared to competitors like Netflix and Disney.

Viacom’s enterprise value is a fraction of other established streaming giants, “but its annual content budget puts it in the range of this peer group,” analysts said.

The media conglomerate also has huge appeal with its large portfolio of popular content brands, including CBS affiliates, Comedy Central, Showtime, Paramount Network, and Pluto TV.

Deutsche Bank is optimistic about the company’s streaming service launched last year, Paramount +, which features content such as “Yellowstone” – recently the most popular cable TV show – and the previous series ” 1883 “on its platform.

Shares of ViacomCBS fell 1.3% on Monday despite analysts’ recent upgrade; After falling more than 20% last year, the stock is up more than 8% so far in 2022.

Crucial quote:

“While not everyone is successful in streaming, we believe Viacom has an opportunity to successfully transition its business model given its portfolio of content (including sports rights),” analysts wrote. of Deutsche Bank. “We understand the skepticism … However, Viacom owns intellectual property (intellectual property) that has created and continues to create successes.”

Large number: 47 million

This is the number of worldwide subscribers of Viacom CBS on its streaming platforms Paramount + and Showtime. Larger competitors like Netflix, Disney and WarnerMedia’s HBO Max have around 214 million, 118 million and 69 million subscribers, respectively.

Tangent:

Ariel Investments founder and chairman John W. Rogers is also bullish on ViacomCBS, citing the stock as one of his top picks for 2022 in an interview with Forbes last month. In addition to the fact that ViacomCBS has a “much broader content set” than many of its competitors, Rogers sees great value in the business as it continues to see subscriber numbers grow and invests heavily in the. streaming.

Further reading:

Discovery shares jump 17% as excitement mounts around WarnerMedia deal (Forbes)

Zynga shares rose 40% after Take-Two announced a $ 12.7 billion takeover (Forbes)

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