The Zacks Analyst Blog Highlights: CBS, Netflix, Amazon. Com., Monsanto and Syngenta AG

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Feb 22, 2012, 09:30 ET

CHICAGO, Feb. 22, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include CBS Corporation (NYSE: CBS), Netflix Inc (Nasdaq: NFLX), Amazon. Com. Inc (Nasdaq: AMZN), Monsanto Company (NYSE: MON) and Syngenta AG (NYSE: SYT).

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Here are highlights from Tuesday's Analyst Blog:

Earnings Scorecard: CBS Corporation

CBS Corporation (NYSE: CBS) reported better-than-expected fourth-quarter 2011 earnings on February 15, 2012. The Wall Street analysts had almost a week to ponder on the earnings results and eventually make their estimates revision.

Below we will cover the results of the recent earnings announcement, subsequent estimate revisions by analysts as well as the Zacks Rank and long-term recommendation for the stock.

Earnings Report Review

CBS Corporation's quarterly earnings of 57 cents a share surpassed the Zacks Consensus Estimate of 53 cents and jumped 23.9% from 46 cents in the year-ago quarter.

Significant political advertising revenues and the second-cycle syndication of CSI, which boosted the prior-year quarter's results, were not there during the reported quarter. Thus, revenue declined 3.1% year over year to $3.78 billion and missed the Zacks Consensus Estimate of $3.92 billion.

(Read our full coverage on this earnings report: CBS Reports Better Than Expected)

Earnings Estimate Revisions - Overview

Since the earning release, estimates for CBS Corporation displayed an uptrend, reflecting that the analysts are optimistic on the company. This seems to be good news, and now let's get into the details of the earnings estimate.

Agreement of Estimate Revisions

Clearly, a positive sentiment is evident among analysts, signifying that they are hopeful on the company's future earnings outlook. In the last seven days, of the 24 analysts covering the stock, 16 have raised estimates for 2012, while none lowered the same.

Looking out to fiscal 2013, story remains the same as 7 analysts raised their earnings estimates, while none moved in the opposite direction.

The upward revision signifies that the analysts remain confident about advertising continuing its momentum in 2012. Political advertising estimates are very high (around $8B) for 2012 for being the year of Presidential election and CBS Corporation being the largest television station in U.S., is expected to benefit largely on this front.

Moreover, the company's effective cost-control measures and growth in high margin revenue coming from streaming deals, increased international syndication revenue and retransmission fees will lead to margin expansion in quarters to come.

Turning to the current quarter, analysts' sentiment remained mixed. In the last 7 days, 3 analysts raised their estimates, while 2 lowered the same. For the second-quarter 2012, 4 analysts made an upward revision, while 2 moved in the opposite direction.

Some of the analysts are cautious about the accelerated ad growth during the year. Further, the lingering macro-economic headwinds are adding fuel to the fire.

Magnitude of Estimate Revisions

In the last 7 days, the Zacks Consensus Estimate for fiscal 2012 and 2013 increased by 4 cents to $2.33 and $2.63, respectively.

Estimates haven't budged for CBS Corporation's first-quarter 2012, the Zacks Consensus Estimate remained stable at 43 cents, and for the second-quarter 2012, it inched up a penny to 60 cents a share in the last 7 days.

The current Zacks Consensus Estimate for first-quarter 2012 is pegged in the range from a low of 38 cents to a high of 51 cents. For fiscal 2012, the estimates range from $2.16 to $2.45.

Our View

CBS remains well positioned to drive revenue growth in the coming quarters through its strategic initiatives and operating efficiencies. Management remains optimistic and expects growth momentum to continue in fiscal 2012, based on reverse compensation from affiliates, strong demand of its content and streaming, retransmission consent and political advertising.

Due to its exposure in publishing, radio and television broadcasting, and outdoor billboard businesses, CBS remains highly susceptible to the advertising market. To mitigate this, the company is striving to add diverse revenue streams to hedge against economic cycles.

Revenue from retransmission keeps growing at a brisk pace. Further, the company is increasingly getting reverse compensation from its affiliates, marking a new source of revenue. The company also expects reverse compensation to expand in the coming quarters.

CBS secured deals worth hundreds of million, including a two-year deal with Netflix Inc (Nasdaq: NFLX), and also signed a non-exclusive licensing agreement with Amazon. Com. Inc (Nasdaq: AMZN). These measures backed CBS to generate revenue from shows that have already been broadcasted on TV years ago and facilitated the company in capitalizing its content.

CBS Corporation's long-term agreements with the NFL, the NCAA, the SEC and the Grammy's will generate stream of positive cash flows for the company in the long run.

Currently, we have a long-term Outperform rating on the stock. Moreover, CBS Corp. holds a Zacks #2 Rank, which translates into a short-term Buy rating.

French Ban Puts Monsanto in a Fix

Troubles cloud over Monsanto Company's (NYSE: MON) European operations, as the French government expressed its intention to continue its ban on the genetically modified (GM) corn crops in 2012.

Despite a ruling from France's top administrative court--ordering the lifting of the ban in November 2011-- France intended to maintain its ban on the domestic cultivation of genetically-modified corn MON810 in 2012 on strong environmental issues. Keeping up with this intent, Environment Ministry of France has reportedly asked EU—for suspension of Monsanto GM corn approval for 2012, of late.

Since February 2008, the use of U.S. agricultural-biotech company Monsanto Co.'s MON810 corn variety has been banned by the French government on the grounds of health and environmental risks.

At the end of November 2011, the Conseil d'Etat administrative court ordered the ban lifted, ruling on a case brought by Monsanto and other companies, opposing the French agriculture ministry's ban on MON 810 corn.

However, recent scientific studies indubitably confirmed environmental hazards, which may be affixed with the planting of the specified variety. Hence, of late, the French environment ministry asked European Commission to suspend authorization to plant Monsanto's genetically modified MON810 corn.

MON810 corn was the only crop to have been granted permission for planting in the European Union, despite losing European and French court rulings. The seed patent for corn MON810 is owned by U.S.-based agro-biotech firm Monsanto Company, the leading global provider of agricultural products--operating in Seeds and Genomics and Agricultural Productivity segments.

Monsanto's biotechnology research and innovations position it as a market leader above its peers, such as Syngenta AG (NYSE: SYT). The company maintains a strong cash position in the first quarter 2012, with net cash provided by operating activities recorded at $1,110 million versus $624 million, a year ago. Free cash flow increased to $856 million during the quarter ended November 30, 2011 compared with $500 million reported a year ago.

We currently maintain a long-term Outperform recommendation on the stock. Monsanto has a Zacks #2 Rank, which translates into a short-term Buy rating (1-3 months).

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