Did hell just freeze over? It must have, because this morning Viacom‘s most relentless naysayer on Wall Street, Bernstein Research’s Todd Juenger, upgraded the stock to “market perform” from “underperform” raising his target price to $73 from $64. It’s not that he thinks CEO Philippe Dauman has turned things around after a series of problems including last year’s ratings woes at Nickelodeon and MTV. Indeed, Juenger says that “there are storm clouds gathering on the horizon” including a possible decline in revenue from streaming services led by Netflix, rising borrowing costs, falling ratings at Nick Jr., and dwindling home video revenues at Paramount. “This has seemed to us like a business in a death spiral — suffering short-term problems, causing the company to resort to desperate short-term actions, which lead to longer-term problems,” Juenger says. But with the share price +47.2% over the last 12 months, Juenger acknowledges that “we have ultimately been wrong on the stock.” Dauman’s aggressive share repurchase efforts have impressed investors, he notes. And if they weren’t scared off when DirecTV resisted Viacom’s effort to raise its prices (which resulted in the company’s channels going dark on the satellite service for 10 days last July), the ratings troubles, and the recent expiration of its licensing deal with Netflix, then nothing ahead is likely to change the stock’s trajectory. “We are faced with a tough choice on our Viacom recommendation,” Juenger says. “Either stubbornly stick to our (admittedly academic) reasoning as to why the stock is over-valued, or concede that our reasoning is wrong (or, as we like to say in this business, ‘really really early’). Today, we are conceding.”

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