Shares of Comcast Corporation CMCSA have lost close to 30% year to date. The adverse impact on Cable seems to have played out, according to Wells Fargo.
The Comcast Analyst: Steven Cahall, a "long-time bear" on CMCSA, upgraded the rating for Comcast from Underweight to Equal Weight, while raising the price target from $30 to $38.
The Comcast Thesis: Although broadband competition is intensifying, the trends are not as bad as feared, Cahall said in the upgrade note.
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“ARPU is holding up better, and we think benefiting from cord cutting, low churn and fiber starting to approach ~$70/mo,” he added.
“While we're bearish on NBCU [NBCUniversal Media] operating trends, we think it will benefit from CMCSA's strong balance sheet,” the analyst wrote. He further said that NBCU can leverage Comcast’s strong balance sheet “opportunistically,” by “adding sports rights that become unaffordable to peers,” acquiring Hulu and evaluating consolidation opportunities.
The analyst also notes that NBCU's streaming service Peacock "might surprise to the upside and cause a re-rating higher for the streamer."
Finally, Cahall supports the idea of Comcast splitting itself, saying, "While we'd welcome a de-merger, we think it's unlikely. It could materially
change our view."
CMCSA Price Action: Shares of Comcast declined by 0.42% to $35.71 at the time of publication Monday.
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