Comcast Still Neutral - Analyst Blog


We reaffirm our long-term Neutral recommendation on Comcast Corp. ( CMCSA ). Although the company's fourth-quarter 2012 financial results fell short of the Zacks Consensus Estimates, the year-over-year growth was strong.

Why Kept at Neutral?

Comcast's Cable business continued to beat market expectations and the NBC Universal division made a solid turnaround. In spite of challenges, the video operation continued with its positive momentum. Comcast has also completed its major technical innovations, such as DOCSIS 3.0, all digital networks, and a multi-platform content delivery network. Moreover, several newly launched services, such as Xfinity Home, Wi-Fi, X1 and high-speed Metro Ethernet will act as long-term growth catalysts for the company.

Nevertheless, following last year's 40% stock price growth, we are apprehensive of restricted market gain in the near term. Hence, we see the Comcast shares as currently fairly valued. Comcast currently has a Zacks Rank #3 (Hold).  

RISK/Reward Virtually Balanced

Comcast is gradually deploying its next-generation Xfinity TV, an on-demand, Web-based service, for subscribers, who will have access to both video programming and Internet. In the fourth quarter of 2012, the company gained a net 341,000 high-speed Internet subscribers and 168,000 telephony customers. Quarterly consolidated average revenue per user (ARPU) was $153.54, up 8.7% year over year. Moreover, Comcast has formed a deal with Fox Networks of  News Corp. ( NWSA ) to distribute Fox's programming to its Xfinity customers.

Recently, Comcast has decided to purchase the remaining 49% stake of NBC Universal from General Electric Co. ( GE ) for a total consideration of $16.7 billion. As the 100% owner of NBC Universal, Comcast has successfully transformed itself as a cable TV technology giant with state-of-the-art integrated content and distribution network. With NBC Universal in its kitty, we believe Comcast will become a major competitor to The Walt Disney Co. ( DIS ).

Nevertheless, a major concern for the pay-TV industry is the prolonged macro-economic fluctuations in the U.S. Despite impressive subscriber retention, Comcast still lost 7,000 residential video subscribers in the reported quarter. Management is hopeful of seeing a net video subscriber addition in the near future. However, we do not foresee this in the next couple of quarters.

COMCAST CORP A (CMCSA): Free Stock Analysis Report

DISNEY WALT (DIS): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

NEWS CORP INC-A (NWSA): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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

This article appears in: Investing , Business , Stocks

Referenced Stocks: CMCSA , DIS , GE , NWSA

More from

Related Videos

Avatars of the Luxe Life
Avatars of the Luxe Life            



Most Active by Volume

  • $6.845 ▲ 12.95%
  • $7.755 ▲ 1.51%
  • $6.98 ▲ 4.18%
  • $17.405 ▲ 0.84%
  • $111.17 ▲ 1.61%
  • $44.43 ▲ 7.94%
  • $103.51 ▲ 1.68%
  • $7.73 ▲ 7.51%
As of 12/18/2014, 10:54 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by