Bank of America analyst Merrill Lynch Jessica Reif Ehrlich upgraded ViacomCBS stock two notches on Thursday to benefit from underperformance amid further consolidation in the media industry. After AT & T Inc. T (+ 2.35%) announced plans to spin off the WarnerMedia business in combination with Discovery Inc. DISCA (-3.81%), Reif Ehrlich assumes that there will be more merger activities Could, and refers to media reports indicating that ViacomCBS VIAC, + 4.61% is a potential target.
According to Bank of America, investors should rely on ViacomCBS in anticipation of a possible acquisition or other transaction in the wake of the massive merger agreement between Discovery and WarnerMedia.
Other potential buyers are big Tech Companies. Reif Ehrlich highlights reports suggesting that Amazon.com Inc. AMZN, + 0.49%, is interested in buying MGM studios, which would mean a deeper look into the media.
“Whether AMZN would consider getting involved with all of VIAC remains unclear. However, Paramount and VIAC’s other content assets (CBS, Showtime, Nickelodeon, etc.) appear to largely complement AMZN’s strategic streaming priorities.” she wrote.
“So far, NFLX has not been acquisitive, but the intensifying competitive landscape could allow a change in strategy,” wrote Reif Ehrlich. “The lack of franchises is a notable void in NFLX’s content offerings that creates challenges as NFLX has to build new audiences with each new show.” It raised its price target on ViacomCBS stock from $ 38 to $ 53, with the new target being an approach to valuing the sum of its parts.