Comcast Upped to Buy on Strong Cable Biz, Solid Q1 - Analyst Blog

Zacks Investment Research upgraded leading cable multi service operator MSO in the U.S., Comcast Corporation CMCSA, by a notch to a Zacks Rank #2 (Buy) on June 24, 2014.

Why the Upgrade?

The company's Cable business continues to perform well. The NBC Universal segment is also witnessing improvement. Moreover, extension of Olympic telecast rights coupled with the launch of innovative services has resulted in video subscriber additions, after a long hiatus of 26 quarters.

In addition, the company is planning to acquire rival Time Warner Cable Inc. TWC which is expected to strengthen its foothold in the U.S. pay-TV market. Comcast is expected to derive a significant $1.5 billion of operating synergy from this merger of which 50% may be realized within the first year of completion of the merger.

Comcast reported strong financial results for the first quarter of 2014. The company maintained its subscriber growth for the second consecutive quarter by adding 24,000 video subscribers against a loss of 25,000 subscribers in the prior-year quarter. The company reported earnings per share of 68 cents which steered past the Zacks Consensus Estimate of 64 cents and jumped 33.3% year over year. Total revenue stood at $17,408 million, up 13.7% year over year and also above the Zacks Consensus Estimate of $17,119 million.

For the current year, in the past 90 days, there has been positive movement in the earnings estimates. Consequently, the Zacks Consensus Estimate has moved up by 1.4% to $2.91.

Other Stocks to Consider

Other stocks worth considering in this sector are Cablevision Systems Corporation CVC and Rogers Communications Inc. RCI. Both these stocks carry the same Zacks Rank as Comcast.