Corus Entertainment Inc. T.CJR.B

Scotia $4.50 target; Maintains Sector Outperform

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Latest Research (June 29, 2020):

OUR TAKE: Mixed. Post Q3F20 results we maintained our Sector Outperform rating, but we lowered our target price to $4.50 due to lower estimates in F21 caused by lower TV results this quarter. While we recognize that the short-term challenges related to COVID-19 will continue to pressure results in Q4/F20 and 1H/F21, we think management has done a good job on cost control and cash flow preservation. We are also encouraged by the long- term progress management has made such as the subscriber take-up of StackTV (now has 2x the subs than we estimated), advanced ad audience segmentation (better ad monetization) and securing content rights with NBCU's Peacock (long-term inventory; avoided Peacock's direct entry into Canada). However, in the near-term, we expect CJR shares to remain volatile due to the uncertainty about the government wage subsidy program (CEWS) that provides ~$9M/month benefit, the impact of the potential return of live sports on viewership and advertising revenue, and the timing and volume of new shows on Global TV's fall line-up. Despite these near-term obstacles, we
maintain that CJR shares are cheap at 4.7x NTM EBITDA, 4.2x NTM PE and over 33% FCF yield, which are all at or near historical troughs.