US Cable Is Down But Not Out. Favorable Cash Flow Is The Silver Lining, Comcast Analyst Says

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  • Citi analyst Michael Rollins upgraded Comcast Corp CMCSA to Buy from Neutral with a price target of $36, down from $42
  • Cable revenue is going ex-growth, and average EBITDA-based valuations have approached Telco levels for the first time since the financial crisis.
  • He believes recent cable share price underperformance is likely getting ahead of 3Q results, reinforcing this new reality. 
  • The silver lining for cable is that these firms still generate favorable annual cash flow. 
  • Rollins also saw an increasing likelihood that the cable firms promptly responded with a plan to stabilize or improve shareholder value. 
  • They may include growing EBITDA even without meaningful revenue growth with a rising broadband/business revenue mix, accelerating technology upgrades and efficiency initiatives, monetizing under-appreciated assets, and opportunistically investing and repatriating cash to shareholders.
  • Price Action: CMCSA shares traded higher by 5.91% at $30.39 on the last check Thursday.
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