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Will Comcast's Focus On Fundamentals Pay Off?

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In a report published Thursday, Morgan Stanley analyst Benjamin Swinburne maintained an Overweight rating on Comcast Corporation (NASDAQ: CMCSA), while raising the price target from $65 to $67.

Comcast's focus on its fundamentals is expected to pay off. "We see ~15% upside from modest multiple expansion, slightly above consensus estimates, and medium-term de-levering. We also see valuation support limiting downside, plus several operating/balance sheet drivers leading to a +30% bull case," analyst Benjamin Swinburne mentioned.

In the report Morgan Stanley noted, "At ~1t6x fwd earnings, Comcast offers highly visible, double-digit EPS growth at a market multiple." The company's shares are even more attractive when viewed relative to a broader set of comps and against its under levered structure.

Increased revenue expectations in the company's cable segment are likely to be offset by investments to improve customer experience. "For NBCU, our full year numbers come up, largely on better than expected 1Q results, higher Parks revenues, and improved profitability at Broadcast, Cable, and Film," Swinburne added.

Comcast's X1 platform is expected to generate ~$1B of revenue by 2016. The company's broadband revenue growth is expected to be driven by continued share gains and modest increase in prices.

"We expect recent broadband sub momentum to continue for the forseeable future, leading to ~50% penetration of homes passed over time (~75% market share in DSL markets and ~50% share in FiOS/U-Verse/Other fiber markets)," the report mentioned.

Latest Ratings for CMCSA

Jun 2017Moffett NathansonDowngradesBuyNeutral
Apr 2017SunTrust Robinson HumphreyInitiates Coverage OnBuy
Jan 2017Pacific CrestDowngradesOverweightSector Weight

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