Wall Street Analyst Upgrades Comcast To Buy Amid 'Unfair' Billing Complaints On Capitol Hill

• Comcast Corporation CMCSA shares are down 4 percent since November 9.
• Argus’ Joseph Bonner upgraded the rating for the company to Buy, while establishing a price target of $72.
• The company’s strong 4Q subscriber metrics indicate that concerns are overblown, Bonner stated.

Comcast reported 4Q revenue of $19.25 billion, representing 8.5 percent y/y growth. Operating cash flow came in at $6.27 billion, up 6.7 percent. Adjusted operating cash flow margin contracted 110bps to 32.6 percent, reflecting investment in the company’s new X1 entertainment interface and costs related to improving the customer experience.

Adjusted EPS was recorded at $0.81, representing 5.2 percent y/y growth. For 2015, Comcast’s revenue stood at $74.5 billion, up 8.3 percent, and adjusted EPS came in at $3.25, up 11 percent.

Analyst Joseph Bonner wrote, “Comcast has been in the cross-hairs of investors concerned about the secular strength of the “cord-cutter/cord-never” phenomenon among millennials; however, based on the company’s recent subscriber metrics, we believe that these concerns are overblown.”

Comcast Cable added 89,000 video subscribers in 4Q15, marking the highest quarterly video net adds in nine years. The growth in video subscribers, strength in high-speed internet and rising ARPU “point to the health of Comcast’s cable business, Bonner mentioned.

The analyst added that Comcast had transformed NBC/Universal “into a growth engine.” Moreover, the company was focused on shareholder returns, with a dividend CAGR of 21.5 percent over the last five years and a healthy share buyback program.

According to news reports, six Democratic US senators had criticized certain TV and broadband providers for charging erroneous fees, including cable modem rental fees being charged to customers who had bought their own modems. The senators named Comcast as a repeat offender.