We reaffirm our long-term Neutral recommendation on
). 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
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
) 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.
) 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.
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
COMCAST CORP A (CMCSA): Free Stock Analysis
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