Nomura Is Buying Comcast, Loves New X1 Platform

• Comcast Corporation CMCSA shares has appreciated 5.53 percent over the past three months, while declining 2.17 percent over the past month.
• Nomura’s Anthony DiClemente has initiated coverage of the company with a Buy rating and price target of $72.
• DiClemente believes that given the company’s “strategic strengths,” its current stock valuation is undemanding, as compared to the peer group and the market.

Analyst Anthony DiClemente explained that “Comcast’s combination of content ownership, advanced X1 user interface technology, and superior broadband distribution infrastructure position it for long-term success.”

DiClemente views the company’s X1 platform as the best user interface in traditional media, and expects “the technology supporting Comcast Cable is likely to continue to support industry-leading ARPU and improving subscriber trends.”

Comcast’s subscribers are expected to grow at a 5-6 percent, driven by the company having the largest footprint in broadband in its Cable segment, and expectations of further increases in broadband speeds.

According to the Nomura report, “NBCU’s scale advantage should drive steady growth in affiliate fees and retransmission consent fees,” while “robust and growing brands/film franchises should drive synergies for Theme Park.”

DiClemente expects the OCF from Theme Parks and Olympics in 2016 to offset deceleration in Cable OCF.

In addition, the company’s robust balance sheet and steady buybacks make it “one of the best capital returns story in traditional cable and media,” and DiClemente expects Comcast to return 80 percent of its free cash flow to shareholders in each of the coming two years.