RBC Capital upgrades Viacom to 'Outperform' on 'Rock Band' and dollar weakness
Associated Press
10/19/09 9:30 AM EDT
NEW YORK — RBC Capital Markets upgraded the stock of Viacom Inc. Monday saying sales of "The Beatles: Rock Band" and a weak dollar should be helping margins.
RBC analysts led by David Bank raised their rating on the stock to "Outperform" from "Sector Perform" and boosted their price target on the media company's stock to $35 from $23. The shares closed Friday at $28.48.
"Rock Band," a music-based video game, finally has a chance to become profitable through the release of its Beatles edition, the analysts wrote. Beatles-related sales have been slightly better than expectations, they said.
Ratings are also improving quarter-over-quarter at another Viacom flagship, cable channel MTV, though they are still down from last year, they noted.
Viacom may also be aided by the decline of the dollar against foreign currencies, since its programming costs are in dollars, but it earns income overseas in local currencies.
Of its peers, Viacom is most likely to beat expectations for third-quarter earnings, the analysts wrote. They expect earnings of 58 cents per share for the quarter, while the average analyst estimate is for 56 cents per share, according to Thomson Reuters.
