Pacific Crest Raises Comcast's Target To $74

Quarterly Results

For the second quarter, Comcast's total revenue of $19.3 billion topped Pacific Crest's and consensus estimates of $18.8 billion and $19.0 billion, respectively. EPS came in at $0.83, $0.02 ahead of the both brokerage and consensus estimate of $0.81.

"Comcast retains an extremely strong position in broadband, and investments in video provide a competitive advantage that appears sustainable. This, and Comcast's scale, provide optionality that warrants continued ownership, in our view," analyst Andy Hargreaves wrote in a note.

Related Link: Comcast Posts Q2 Results, But Are Investors Only Concerned About Its Recent M&A Spree?

Hargreaves, who raised the price target on the stock by $9 to $74, noted that the rollout of X1 reached 40 percent of the base exiting the second quarter, and should reach 50 percent by the end of the year.

The analyst said X1, plus Comcast's leadership position in broadband, should provide a competitive advantage for the media and technology company in video for at least the next 12 to 18 months.

Justification

As such, Hargreaves upped his 2016 revenue and EPS estimates to $79.6 billion and $3.49 from $78.4 billion and $3.44. The analyst also raised his 2017 revenue estimate to $82.3 billion from $82.1 billion, but cut EPS view to $3.72 from $3.80 on lower margin expectations at NBCU.

However, Hargreaves recommends owning Comcast, as its leadership position as the leader in broadband and video should support solid EBITDA and EPS growth for the foreseeable future.

"The balance sheet remains strong and leaves potential for upside to its capital return program, more strategic M&A, or expansion into adjacent businesses like wireless," the analyst added.

At the time of writing, shares of Comcast gained 0.60 percent on the day to $68.32.