October 20, 2014 / 3:11 AM / 3 years ago

CBS shares could gain 25 percent - Barron's

NEW YORK, Oct 19 (Reuters) - Shares of CBS Corp could gain 25 percent in part given their cheap price and the promise of the company's premium cable TV channel Showtime, Barron's financial newspaper said in its latest edition.

CBS Shares have fallen about 18 percent this year. The media company reported a second-quarter profit that beat Wall Street forecasts in August, though weaker advertising and a decline in television licensing dragged on revenue.

Investor pessimism toward the company's shares is unwarranted and they could easily regain their losses in the coming year, Barron's said in its Oct. 20 issue. CBS is becoming less dependent on ads, and advertising will likely comprise just half of the company's total revenue by next year, it added. (on.barrons.com/1vSrt8A)

CBS shares trade at 14 times earnings projections for the next 12 months, below peers such as Walt Disney Co and Twenty-First Century Fox Inc, and would be worth $66 at a multiple similar to them, Barron's said. That marks upside of more than 25 percent from the stock's closing price on Friday of $52.35.

Barron's said a direct-to-consumer version of Showtime would be nearly identical to Netflix while offering "arguably better programming" and suggested that Showtime could be worth $12 billion. "(CBS chief executive Les Moonves) says CBS has no interest in a Showtime spinoff, but there's still value to be unlocked. Investors don't even have to go searching for a new station," Barron's said. (Reporting by Sam Forgione; Editing by Gopakumar Warrier)

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