Comcast Corporation (NASDAQ:CMCSA) Stock May Have Room to Climb

While Comcast Corporation(NASDAQ:CMCSA)(NASDAQ:CMCSK) may have missed out on its big buy of Time Warner Cable Inc (NYSE:TWC), the company remains one of the largest and fastest growing media companies and is bigger than the next three cable operators combined. The company maintains key advantages and is likely to see gains in high-speed broadband both in residential and business services.

Comcast primarily known as a cable operator serves more than 22 million video subscribers, nearly 22 million for high-speed Internet service, and almost 11 million for digital phone service. Additionally Comcast owns NBC Universal which owns a vast network of broadcast and content properties including many leading cable networks like USA, E!, CNBC, MSNBC, Bravo, Oxygen, Syfy, Versus, Golf Channel, G4, Style, 12 regional sports and networks, and two broadcast networks (NBC and Telemundo).

While challenges to video remain long term, the company has hedges in its ownership of content properties, and its higher margin high-speed broadband service which maintains competitive advantages. The company believes that its X1 platform provides a compelling video product with abilities beyond other cable operators.

Comcast maintains a strong balance sheet with ample financial flexibility for its capital allocation commitments. The company has been smart at how it deploys capital and is likely to buy-back ample shares now that the Time Warner Cable Inc merger fell through. The Roberts’ family, whom are controlling shareholders, have showed a shrewd ability to do deals and are likely to remain excellent stewards of capital for shareholders.

Analyst Opinions

Barclays maintains an Outperform with a price target of $68 based on the fact that the valuation of Comcast’s cable business at present is similar to that of the newspaper businesses at six times Ebitda, which they believe reflects an attractive opportunity and why they rate it Overweight.

S&P Capital I/Q has a 12-month price target of $65 based on projected EV/EBITDA of about 8.7X. They cite regulatory overhang from the FCC’s Title II proceedings on broadband regulations, intensifying pay-TV competition and a sharp macroeconomic slowdown in consumer spending or household formation as the chief risks.

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