Amid weak economic data and advertising sales, media companies are looking for additional sources of revenue to supplement lagging advertising sales. Because CBS relies heavily on advertising revenue, its stock may have hit its peak, one analyst said—but another is still long on the media giant.
"The short position on CBS is at a 5-year high, and I think you have to be very, very careful about putting any money into CBS at this moment," said Porter Bibb of Media Tech Capital Partners.
Bibb cited CBS' dependence on advertising for 65 percent of its revenue to support his opinion that the company has reached its peak.
Counterpoint:
Michael Morris of Davenport & Co. said CBS' recent deals with Netflix and Amazon to sell content could contribute to its stock's future rise. Media companies have begun selling content to internet providers, which generates high margins, to generate an additional source of revenue.
"Certainly these companies will probably go with the macroeconomy in the short term—but for CBS, I think it has a number of positives," Morris said.
The media company's earnings released on Tuesdaykicks off a string of earnings from large media companies including Viacom , Discovery Communications , Comcast* and Time Warner .
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Disclosures:
Disclosure information was not available for Porter Bibb or Michael Morris or his company.
*Comcast is the corporate parent of CNBC.
