ViacomCBS (VIAC) reported strong first-quarter results that topped Wall Street expectations and were boosted by streaming services.
Revenue of $7.4 billion increased 14% year-on-year and beat the consensus estimate of $7.3 billion. Adjusted EPS of $1.52 rose from $1.12 a year ago and topped consensus forecasts of $1.23.
The streaming business turned out to be a major bright spot in the company’s earnings report. It gained 6 million premium streaming subscribers across Showtime and Paramount+ to finish the quarter with a total of 36 million subscribers. That drove a 69% increase in streaming subscription revenue.
The gains have pushed ViacomCBS almost halfway to its target of reaching 75 million streaming subscribers by 2024.
Furthermore, the company’s ad-supported streaming service, Pluto TV, also continued to grow. It gained another 6 million users, pushing the total to approximately 50 million.
ViacomCBS plans to double down on streaming with more original content. The company has ample cash to pursue its goal. It finished the latest quarter with a cash balance of $5.5 billion, boosted by $1.6 billion of free cash flow generated in the quarter, and $2.7 billion raised recently through an equity offering. Additionally, ViacomCBS has access to $3.5 billion through a revolving credit facility. (See ViacomCBS stock analysis on TipRanks)
“Our early momentum in streaming is a testament to the breadth and relevance of our differentiated offerings,” said ViacomCBS CEO, Bob Bakish.
Rosenblatt Securities analyst Mark Zgutowicz maintained a Hold rating but did not assign a price target on VIAC stock after the earnings report. However, Zgutowicz is keeping an eye on the expansion of the company’s streaming business.
“On the call we are looking for more color on ad-supported Paramount+ timing/ARPU and the timing of further international launches,” said Zgutowicz.
Consensus among analysts on Wall Street is that VIAC is a Hold based on 6 Buy, 11 Hold, and 4 Sell ratings. The average analyst price target of $55.67 implies 45.92% upside potential to the current price.
VIAC scores a 5 out of 10 on TipRanks’ Smart Score rating tool, indicating the stock’s performance is likely to align with market expectations.