CBS Corp.’s pending reunification with Viacom Inc. is eliciting robust reactions on Wall Avenue, with at the least two analysts downgrading CBS’s inventory after the merger announcement and one upgrading it.

Essentially the most dramatic transfer got here from Bernstein’s Todd Juenger, who bumped his ranking on CBS shares

CBS, -6.80%

 down by two notches, to underperform from outperform. In his view, the all-stock deal will immediate CBS to speculate extra closely in a direct-to-consumer providing, which he sees as a dropping technique as a result of required spending on new authentic content material, foregone licensing income, and the potential for restricted enchantment in a crowded market.

“We don’t suppose it’s an excessive amount of of a stretch to say that CBS/Viacom

VIAB, -7.00%,

like many others, has seen the inventory market’s optimistic response to Disney’s plans and determined ‘let’s do this too,’” Juenger wrote.

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He gave the instance of Viacom’s determination to repeat Disney by taking considered one of its common animated franchises and making a live-action film. “Viacom’s Dora the Explorer (considered one of Nickelodeon’s greater, most vital manufacturers) simply opened with an embarrassing $17 million home field workplace. Disney’s The Lion King delivered $185 million (and that was only one in a protracted line of Disney dwell motion remakes). We predict that’s an ideal corollary to how properly Viacom/CBS will be capable to copy Disney’s general technique.”

CBS shares are off 7.3% in Wednesday buying and selling after gaining 1.4% in Tuesday’s session. The inventory is on observe for its largest single-day drop since 2011.

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BMO Capital Markets analyst downgraded the inventory to market carry out from outperform, writing that the yr forward is prone to be consumed by near-term content material spending and probably extra merger bulletins.

“Our prior stand alone thesis had been based mostly on continued combine shift to non-advertising revenues, outsized impression of retransmission price progress, and lack of publicity to the essential cable bundle,” he wrote of CBS. “That’s fairly merely not the case.”

Financial institution of America Merrill Lynch’s Jessica Reif Ehrlich, nevertheless, sees the pending mixture as cause to present CBS shares one other look. She upgraded the inventory to purchase from impartial, citing the removing of leadership-related overhangs, the chance for incremental synergies, and “a reasonably clear line of website on double-digit EPS accretion.”

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Although MoffettNathanson’s Michael Nathanson stated the mixed entity “should work further onerous to show the monetary deserves of this mixture,” he reiterated his bullish view of CBS’s inventory.

“Within the close to time period, a mixed advert gross sales power with larger digital stock ought to drive CPMs and advert income greater – as we’ve simply seen with each NBCU

CMCSA, -1.99%

 and Discovery

DISCA, -5.88%

 – in subsequent yr’s upfront,” he wrote. “Secondly, Viacom has not been in a position to achieve vast carriage on key MVPDs, which needs to be fastened as new agreements develop into due.”

CBS shares are up about 3% up to now in 2019, whereas Viacom shares are up 5.3%. The S&P 500

SPX, -2.10%

 has gained 14% in that point.