Les Moonves Gets Chance to Face Investors as CBS Reports Earnings

(Bloomberg) -- All eyes are on CBS Corp. ahead of its earnings report Thursday afternoon.

What was supposed to be a routine quarter for the owner of the most-watched U.S. television network is now overshadowed by allegations of sexual misconduct against Chief Executive Officer Les Moonves. While Wall Street expects the second-quarter report to show continued revenue and earnings growth, analysts say that any positive traction from the company’s financial results will probably be muted.

Prior to the July 27 report in the New Yorker magazine on the allegations from six women, the New York-based company’s market value had grown 18 percent since its last earnings report. Since the Moonves news broke, the stock has fallen to levels it hasn’t seen in almost two months.

Les Moonves Gets Chance to Face Investors as CBS Reports Earnings

Cowen analyst Doug Creutz cut his rating on CBS to market perform from outperform earlier this week, saying “there are too many unquantifiable variables” facing CBS with the Moonves overhang, the power struggle with Sumner Redstone’s National Amusements Inc. and the potential to recombine with Viacom Inc. Creutz said it’s unlikely that the shares will outperform while all these issues are still looming.

Investors were already worried about CBS’s future, as traditional media companies have been pressured by the rising popularity of streaming TV and movie platforms such as Netflix Inc. Some conventional players like Walt Disney Co. have sought acquisitions in an effort to bulk up.

“The CBS board fails to understand just how tenuous CBS’ long-term positioning is within a world where scale keeps being redefined larger and larger with an increasingly aggressive invasion of Hollywood by the tech platforms,” BTIG analyst Richard Greenfield wrote in a note to clients on Tuesday.

Loop Capital analyst Alan Gould recommended that investors don’t sell CBS shares in the wake of the “damaging” New Yorker report. Gould reiterated his buy rating on Monday, saying “the stock is undervalued in each and every permutation” of the potential outcomes from the Moonves saga.

Just the Numbers

  • 2Q adjusted earnings per share estimate $1.11 (range $1.07 to $1.19)
  • 2Q revenue estimate $3.46 billion (range $3.36 billion to $3.53 billion)
  • 2Q adjusted operating income estimate $681.7 million (range $664 million to $721 million)
  • 2Q segment revenue estimates (average of two analysts compiled by Bloomberg News)
    • Entertainment $2.37 billion
    • Cable Networks $613.5 million
    • Publishing $211 million
    • Local Broadcasting $428 million

Data

  • CBS has 21 buys, 11 holds, and 1 sell rating. The average analyst price target is $66, according to data compiled by Bloomberg
  • Implied 1-day share move following earnings is 3.7%
  • Shares rose after eight of the prior 12 earnings reports
  • Adjusted EPS beat or matched estimates in 11 of the past 12 quarters

Timing

  • Earnings release expected Aug. 2 after market close
  • Earnings call scheduled for 4:30 p.m. New York time (888) 204-4520
  • Conference call website

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