Barclays 'Re-Rates' Comcast At Overweight, Says Cable Business Is Significantly Undervalued

In a report published Wednesday, Barclays analysts reinitiated coverage of

with an Overweight rating and a price target of $68. Although Comcast's EBITDA is 60 percent higher than that of

, its EV is smaller than Disney's. The low EV is partially a result of concerns surrounding "regulation and cable M&A dynamics," the analysts believe that the valuation of Comcast's cable business offers "an attractive opportunity." In the report Barclays noted, "While there is a secular shift in market share towards cable (away from satellite), we believe Comcast technology is likely to make this market share shift more sustainable for the company compared to other cable operators. Comcast's X1 platform could add more than 150bps to its cable top line growth along with more operating leverage than cable businesses typically have." The analysts believe that this technology could in time "blur the boundary" between offline and online content. Moreover, in due course, Comcast would offer wireless data, allowing the company entry into a market that is significantly larger than the cable industry. Barclays cites Comcast as its Top Pick, while setting the EPS estimates for the current fiscal year and the next one at $3.35 and $3.86, respectively.