ViacomCBS announced on Jan. 19 that its streaming service, Paramount+ will launch in the US and Latin America on March 4. The rebranded streaming service will be rolled out in Nordic countries and Australia on March 25 and in mid-2021, respectively.
ViacomCBS’s (VIAC) shares fell 3.4% to $43.75 on Jan. 19. The company announced that its current streaming service, CBS All Access will be rebranded to Paramount+. The company’s current streaming service CBS All Access offers two price tiers. Its basic service with limited ads is priced at $5.99 per month, and a commercials-free service at $9.99 per month that is without ads. The media giant’s other streaming services also include Showtime and Pluto TV.
ViacomCBS is expected to announce its 4Q and FY20 results on Feb. 24. At the end of 3Q20, ViacomCBS had 17.9 million streaming services subscribers in the US, reflecting a 72% increase year-on-year. The media company is increasingly focused on streaming services as a growth opportunity. In 3Q20, it generated $636 million from domestic streaming and digital video advertising revenues, a rise of 56% year-on-year. (See VIAC stock analysis on TipRanks)
On Jan. 19, Barclays analyst Kannan Venkateshwar downgraded the stock from Buy to Sell and reduced the price target from $36 to $35 (20% downside potential).
Venkateshwar views the optimism around the launch of Paramount+ as premature. Additionally, the analyst believes that there is not much upside to the stock at present levels.
In November, Rosenblatt Securities analyst Bernie McTernan reiterated a Hold rating on the stock and raised the price target from $28 to $30.
“We are taking a relatively conservative view on Paramount+ until we learn more about the original programming hitting the service,” McTernan wrote in a note to investors. “While we like the company’s multi-pronged distribution points in streaming, over the medium term we have concerns over balancing share gains with their own stream services and licensing to third parties.”
Overall, the Street consensus is a Hold on the stock. That is based on 5 Buys, 7 Holds, and 3 Sells. The average price target of $36 suggests downside potential of around 17.7% over the next 12 months. The stock has ballooned almost 60% in the past three months.