Viacom Shares Slip on Key Analyst Downgrade

Michael Nathanson says, “The old Viacom playbook no longer works”

Last Updated: April 4, 2016 @ 9:38 AM

Shares in Viacom slipped Monday after a key analyst told investors he could no longer recommend buying the stock.

Michael Nathanson of firm MoffettNathanson said he’s given up on his belief that Viacom’s television ratings would improve while the cable ad market would strengthen.

“Having seen that trade work many times over the past decade, we expected similar results this year,” he wrote in his note downgrading the stock to neutral from buy. “Clearly, the old Viacom playbook no longer works.”

He also lowered his estimates for earnings from Viacom, which operates cable networks like Comedy Central and MTV, as well as the Paramount movie studio. “It doesn’t take a genius to say that we were wildly wrong in our forecasts,” Nathanson said.

In early trading Monday, Viacom’s Class B shares were down as much as 3.1 percent at $39.91. Recently, they were 1.7 percent lower. Over the last year, they have tumbled more than 40 percent.

The company’s stock has gotten hammered over that span, as investors question Viacom’s future while audiences migrate to online video and households scale back pay-TV subscriptions. Recent box office bombs like “Whiskey Tango Foxtrot” and “Zoolander 2” have undermined the company’s movie studio, in which Viacom is hoping to sell a minority stake by the end of June.

Viacom declined to comment.