DirecTV Now A Potential Threat To Comcast: Baird

AT&T Inc’s T pending DIRECTV DTV Now OTT offer “could be disruptive to the industry” and a potential threat to Comcast Corporation CMCSA, Baird’s William V. Power said in a report. He maintained an Outperform rating on Comcast, with a price target of $70.

“Speaking at recent investor conferences, Comcast provided updates on several topics, including wireless, X1 progress, the Olympics and rising programming costs,” analyst Power wrote. He added that although Comcast has been a top pick, the stock valuation is now “closer to fair,” especially given potentially higher OTT competitive threats going ahead.

Updates From Comcast

Earlier this week, Comcast had indicated plans to launch a wireless service using its WiFi hotspots and the network of Verizon Communications Inc. VZ in mid-2017.

Regarding M&A, Power commented that Comcast was unlikely to bid for T-Mobile US Inc TMUS or any other wireless operator in the near term, although it could do so in the longer term “as the wireless bundle/video opportunity develops.”

Comcast mentioned that $1.2 billion in advertising revenue had been generated from the Olympics, up 20 percent from the London event, with $250 million of EBITDA.

Potential Threat From DirecTV Now

“Depending on pricing and execution, AT&T's pending DirecTV Now OTT offer could be disruptive to the industry, and at least bears monitoring as it and other OTT offers in 2017, are rolled out,” the analyst noted.

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