As Wells Fargo upgrades ViacomCBS to overweight, is it time to buy VIAC shares?

On Wednesday, ViacomCBS Inc. (NASDAQ:VIAC) shares surged more than 6% after Wells Fargo analysts upgraded the stock to an overweight (buy) rating. Analyst Steven Cahall cited the company’s premium subscriber growth and its user base as potential catalysts that could drive revenue to $8 billion within the next 12 months.

Cahall now expects ViacomCBS on-demand video subscribers to reach 70 million by the end of next year; users for ad-supported content could reach 147 million. As a result, the firm now sees VIAC revenues reaching $8 billion in the fiscal year 2022.

Should you invest in ViacomCBS shares in August 2021?

From a valuation perspective, ViacomCBS shares look attractively valued at a trailing 12-month P/E ratio of 7.75, making the stock attractive to value investors. However, the company’s growth prospects look dire, with analysts expecting earnings per share to fall by 26.30% this year before rising by just 2.88% next year.

Therefore, growth investors may opt for alternatives, while value investors may consider assessing the stock further before investors.

Sometimes attractive P/E ratios can turn into value traps. However, with Wells Fargo predicting significant subscriber growth and revenue on track to hit $8 billion, VIAC’s price-sales ratio of 0.99 could improve further within the next 12 months. As a result, investors willing to overlook the short-term turbulence could find VIAC shares attractive at current valuation multiples.

Technical overview: ViacomCBS stock price predictions for Q3 2021

Technically, ViacomCBS shares seem to be trading within a sideways channel formation in the intraday chart. Furthermore, stock price recently bounced off the support trendline to trade off the 100-day moving average. 

However, it is yet to hit overbought conditions of the 14-day RSI, leaving more room for upward movement. Therefore, investors can target extended rebounds at approximately $44.96 or higher at $48.12. The key supports are at $37.75 and $34.15.

Bottom line: the case for buying ViacomCBS shares now

In summary, although analysts expect ViacomCBS earnings to decline this year, the stock still trades at attractive P/E ratios. 

Furthermore, with revenues rising amid soaring premium subscriber numbers, the upward momentum could continue until the price reaches overbought conditions. Therefore, it may not be too late to buy VIAC shares following Wednesday’s spike.