Market Overview

Cord Cutters Haven't Killed The Cable Industry — It's Bringing Them Their Broadband

Share:
Cord Cutters Haven't Killed The Cable Industry — It's Bringing Them Their Broadband

Remember how the cable industry was going to crash as subscribers cut the cord and started streaming everything? Turns out the cable industry is a key player in streaming, too, providing a lot of broadband access to bring internet into homes.

The Broadband Bull Case

Morgan Stanley analyst Benjamin Swinburne said the cable industry in 2019 was a surprisingly good year. The industry wasn't negatively affected by cord cutting to the degree expected, and capital spending was light.

The sector, which saw stocks up about 45%, is winning not necessarily on traditional cable TV but as a provider of broadband internet. The question is, can the industry repeat in 2020?

"Continued network investment, product enhancements, and the secular growth in consumer demand for bandwidth all play to cable's strength," Swinburne wrote in a note. "Routinely taking over 100% of market growth now, Cable is winning the broadband market."

And that mix shift away from pay-TV toward broadband is driving higher return on investment, because of the lower cost of providing broadband service.

Comcast Still King?

Swinburne particularly likes cable industry giant Comcast Corporation (NASDAQ: CMCSA), on which he has an Overweight rating and $53 price target, and says has "healthy upside and limited downside."

There may remain a threat to cable broadband from mobile, but it's not being felt yet.

"Despite being two years further along in its development and even initial deployments ... market concerns regarding 5G as a competitor to cable broadband have faded," Swinburne wrote Thursday.

Still Bullish On AT&T's Warner HBO

Meanwhile, the companies that actually provide the content, whether by traditional cable or streaming, still have to spend money on that content.

Warner Media's HBO recently announced it's seeing pressure on operating income from new content and other costs, which led Bank of America analyst David Barden to lower slightly his revenue estimates for Warner Media parent AT&T Inc. (NYSE: T).

Barden reiterated a Buy rating on AT&T with a $43 price target.

Stock Prices

Comcast shares were trading up 0.81% on Thursday at $46.62. Shares of AT&T were down 0.28% at $37.78.

Related Links:

Morgan Stanley Remains Bullish On Comcast

RBC Downgrades Comcast, Charter On Cable Concerns

Latest Ratings for CMCSA

DateFirmActionFromTo
Jan 2020ReiteratesBuy
Jan 2020MaintainsBuy
Jan 2020DowngradesBuyNeutral

View More Analyst Ratings for CMCSA
View the Latest Analyst Ratings

Posted-In: Bank of America Benjamin Swinburne broadband Cord CuttingAnalyst Color Reiteration Analyst Ratings Tech Best of Benzinga

 

Related Articles (CMCSA + T)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TSCOPiper SandlerMaintains119.0
UNPBMO CapitalMaintains200.0
UNPArgus ResearchMaintains205.0
ISRGJP MorganMaintains665.0
EHTHRBC CapitalMaintains132.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com