UPDATE: Brean Capital Reiterates on Comcast as Pullback Creates Opportunity
In a report published Monday, Brean Capital analyst Todd Mitchell reiterated a Buy rating on Comcast (NASDAQ: CMCSA), but lowered the price target from $63.00 to $60.00.
In the report, Brean Capital noted, “We are trimming our price target for CMCSA to $60 from $63, but reiterating our Buy rating, and we are upgrading TWC to Buy from Hold, and setting a price target of $165. Shares of both have underperformed since Comcast announced its bid for TWC in an un-collared all-stock deal and the entire group saw its M&A premium deflate. We think this deal will get done with a minimum of fuss, and we see the potential for upside to Comcast's forecast for synergies. We expect cable will continue to be challenged by new OTT entrants and rising capital intensity, but we believe Comcast is uniquely well positioned to handle this situation, and we believe TWC will reap significant benefits from having Comcast's template imposed on it, which should support increased capital returns once the deal closes. We also believe Comcast sees billion-dollar-plus opportunities in wireless and advertising as a result of the scale the deal provides.
"We are trimming our target price on CMCSA to reflect the general pullback in cable multiples; however, we still see the potential for significant upside as implied in our new $60 target, which in turn would imply a fair value of $165 for TWC given the all-stock structure of the deal.”
Comcast closed on Thursday at $49.10.
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