Comcast Corporation CMCSA is "ready to breakout" in 2021 after COVID-19 headwinds impacted its performance in 2020, according to BofA Securities.
The Analyst: Jessica Reif Ehrlich maintains a Buy rating on Comcast's stock with a price target lifted from $53 to $62.
The Thesis: Comcast's stock could prove to be a winner in 2021 amid several catalysts, Ehrlich wrote in a note.
As the pandemic eases with the rollout of vaccines, Ehrlich said NBCU in particular stands to benefit from recent restructuring and a shift in its reporting segments to include the streaming platform Peacock in 2021.
Video price increases are consistent with management's focus on higher-end subscribers instead of low-end subscribers that are EBITDA neutral or even free cash flow negative.
Comcast benefits from reduced capital intensity and expectations for solid free cash flow growth.
The company has made continued progress towards an ideal target leverage that would warrant allocating money towards share buybacks.
Finally, Comcast's stock is undervalued as its cable division is trading at a discount to its peers and even "significantly below" recent private market transaction multiples, the analyst wrote in the note. As such, the stock is "poised to outperform" after a year of lagging its peers.
CMCSA Price Action: Shares of Comcast traded higher by 1.6% to $51.81 at publication time.
Photo courtesy: Mike Mozart via Wikimedia
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