We reaffirm our Neutral recommendation on
). The company reported mixed financial results for the first
quarter of 2013. While net income outpaced the Zacks Consensus
Estimate, revenues fell below the same. Comcast currently has a
Zacks Rank #3 (Hold).
Why Kept at Neutral?
Comcast's Cable business continued to beat market
expectations, which helped the company to generate a record high
free cash flow. Management is investing heavily across its NBC
Universal portfolio. In Apr 2013, Comcast completed the
acquisition of the remaining 49% stake of NBC Universal from
General Electric Co.
The company has also completed its major technical
innovations, such as DOCSIS 3.0, all digital networks, and a
multi-platform content delivery network. Furthermore,
newly-launched services such as Xfinity Home, Wi-Fi, X1,
Streampix and high-speed Metro Ethernet are the several long-term
growth catalysts for the company.
Comcast is aggressively targeting the small and medium-sized
business segment. Comcast's Business Hospitality division
provides an integrated package of voice trunking, Ethernet-based
Internet and HDTV services. For small-sized enterprises, the
company is providing metro Ethernet services in most of its
Comcast generated over $2.4 billion of revenues from the small
and mid-sized business segments in 2012 and is expected to
generate $3 billion of revenues from this segment in 2013.
However, continued loss of video customers is a major concern.
The pay-TV industry is suffering from the prolonged macroeconomic
fluctuations in the U.S. Comcast lost 60,000 residential video
subscribers in the reported quarter compared with 37,000 in the
In the U.S., cable operators are facing fierce competition
from telecom service providers.
Verizon Communications Inc.
) are quickly gaining market share from cable MSOs by offering
fiber-based TV and other high-speed broadband services.
COMCAST CORP A (CMCSA): Free Stock Analysis
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