Comcast Remains Neutral - Analyst Blog

By Zacks Equity Research,

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We reaffirm our Neutral recommendation on Comcast Corp. ( CMCSA ). 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. ( GE ).

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 point-of-presences.

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 year-ago quarter.

In the U.S., cable operators are facing fierce competition from telecom service providers. Verizon Communications Inc. ( VZ ) and AT&T Inc. ( T ) 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 Report

GENL ELECTRIC (GE): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: CMCSA , GE , T , VZ

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