CBS Stock Falls On Analyst Downgrade, Auto Industry Fears

CBS stock fell almost 18 percent Monday following UBS's downgrade of the media stock from "neutral" to "sell." The downgrade stems from fears of the auto industry's troubles adversely affecting the advertising climate.

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A significant portion of CBS' revenue - 65% - is generated through advertising sales, and the auto industry has traditionally been one of the largest advertisers.

"With the news about the auto industry, there are questions about the future of auto advertising," Gabelli & Co. analyst Christopher Marangi told Dow Jones Newswires, adding that a large portion of CBS' advertising is local ads, which "tend to have a very high component of autos."

In their report, UBS analysts expressed worry about CBS' credit risk and predicted permanent changes to the ad market as a result of the auto industry's troubles:

"Ad buyers are looking for higher return on their marketing investments. Given a structural reduction in demand, we believe a significant portion of these changes will likely be permanent."

CBS stock opened at $4.20 Monday morning and closed at $3.79, down almost 18% from Friday's close of $4.61.