Comcast's Focus on Cash Flows Over Subscribers in Competitive Landscape Draws Mixed Analyst Reactions

Oppenheimer analyst Timothy Horan maintained an Outperform rating on Comcast Corp CMCSA with a price target of $55.

CMCSA reported a second straight quarter of impressive beats in EBITDA and FCF as 3Q profitability prevailed over chasing low-quality subscribers. 

Softness in broadband subscribers seemed to overshadow otherwise strong consolidated results this quarter. Horan notes that focusing on FCF growth versus subscribers is the right strategy and is positive for the industry. 

Significant network upgrades and footprint expansion will ultimately stabilize broadband but will take several years as they have a 70% subscriber market share. 

CMCSA is expanding margins, has a strong balance sheet, and returns FCF to shareholders in dividends and buybacks.

Horan projects a Q4 revenue of $30.34 billion and EPS of $ 0.77.

Raymond James analyst Frank G. Louthan, IV has a Market Perform rating on the stock.

The analyst expects Comcast to remain at a lower valuation for some time as the more challenging competitive environment keeps multiples depressed.

While it is obvious now that EBITDA and FCF can benefit from taking a breather on subscribers, the Street was looking for something more substantive than losses and a decline in the trends on wireless.

While the (18K) loss was better than his (38K) estimate, it was still weak in a seasonally better quarter.

CMCSA has lost almost 100 bps of market share in the last year, adding 942,000 locations while losing (55,000) subscribers.

The analyst expects to see this kind of volatility until the Street focuses more on FCF and realizes this is a 15% market share loss, not a 50% loss.

Rosenblatt analyst Barton Crockett reiterated a Neutral and a $44 price target.

Scotiabank analyst Jeff Fan downgraded Comcast from Sector Outperform to Sector Perform and a $49 price target.

Price Action: CMCSA shares traded higher by 1.81% at $39.86 on the last check Friday.