We reaffirm our long-term Neutral recommendation on
). The company reported strong financial results for the second
quarter of 2013. Both the top and the bottom line beat the Zacks
Consensus Estimate. Comcast currently has a Zacks Rank #3 (Hold).
We believe Comcast is currently fairly valued.
Why Kept at Neutral?
Comcast's Cable business maintained its strong performance and
the struggling NBC Universal segment witnessed an improvement. As
a result, Comcast generated a record-high free cash flow. The
company has already completed its major technical innovations,
such as DOCSIS 3.0, all digital networks and a multi-platform
content delivery network. Moreover, newly-launched services such
as Xfinity Home, Wi-Fi, Streampix, X1, upcoming X2 and the
high-speed Metro Ethernet are several long-term growth catalysts
for the company.
In the second quarter of 2013, Comcast gained a net 187,000
high-speed Internet subscribers and 161,000 telephony customers.
Quarterly consolidated average revenue per user (ARPU) was $160,
up 7.4% year over year. Comcast's bundled services are lucrative
growth opportunities. Nearly 77% of its video customers subscribe
to two services and almost 42% customers subscribe to three
On the other hand, continued loss of video customers is a
concern. The cable TV operators are gradually losing their hold
in the U.S. pay-TV market. Comcast lost 159,000 residential video
subscribers in the second quarter of 2013. Nine large cable TV
operators, including Comcast and
Time Warner Cable Inc.
), together lost a whopping 555,000 video subscribers in the same
timeframe. Whereas, telecom giants,
Verizon Communications Inc.
), jointly gained 373,000 subscribers in the same quarter.
COMCAST CORP A (CMCSA): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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