It’s a challenging world for cable and satellite companies, but one Wall Street analyst said investors are a bit too negative on the outlook for Comcast Corporation CMCSA 1.48%.
The Analyst
Buckingham Research Group analyst Matthew Harrigan initiated coverage of Comcast with a Buy rating and $48 price target.
The Thesis
Comcast has a lot of good things going for it and its stock is relatively cheap at the moment, Harrigan said. (See Harrigan’s track record here.)
Comcast’s cable TV, technology and content assets are unparalleled in the media market, the analyst said.
Investors concerned about cord-cutting have put pressure on Comcast stock, but Harrgan estimates the company will lose only about 6 percent of its current video customer base through 2021. At the same time, Buckingham values Comcast’s cable business at $186 billion and NBCUniversal at $91 billion. The firm’s $48 price target is based on a conservative 9.0x multiple on estimated operating cash flow.
At the same time Comcast is losing customers, Harrigan said it will gain cash flow from its cable business at a compound annual rate of 4.7 percent.
“Given Comcast’s huge customer base, pricing should take precedence over mild volume changes,” he said.
Comcast’s reported interest in acquiring assets from Twenty-First Century Fox Inc FOXA 0.46% is a wild card and potential catalyst for the stock in the near term. Harriganestimates these assets could generate nearly $3.8 billion in 2018 EBITDA.
From a capital return perspective, Buckingham is calling…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
