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

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