© Reuters. Comcast (CMCSA) Upgraded at Citi – Sees Plans to Improve Shareholder Value
By Sam Boughedda
Citi upgraded shares of Comcast (NASDAQ:) to Buy from Neutral, with its price target cut to $36 from $42 per share.
Analysts there said in a note on U.S. cable stocks that cable revenue is “going ex-growth,” and average EBITDA-based valuations have approached Telco levels for the first time since the period surrounding the financial crisis.
“We believe recent cable share price underperformance is likely getting ahead of 3Q results that are likely to reinforce this new reality. The silver lining for cable is that these firms still generate favorable annual cash flow,” wrote the analysts.
Citi also sees an increasing likelihood that the cable firms promptly respond with a plan to stabilize or improve value for shareholders.
The analysts said the plans may “include: grow EBITDA even without meaningful revenue growth with a rising mix of broadband/business revenue; accelerate technology upgrades and efficiency initiatives; monetize under-appreciated assets; and opportunistically invest and repatriate cash to shareholders.”
Elsewhere Thursday, Comcast’s price target was cut to $45 from $50 per share at Morgan Stanley. Analysts said in a note that “CMCSA shares are now trading in line with Wireline Telco’s and and at a discount to the rest of cable and T/VZ, despite the most diversified earnings base and lowest financial leverage.”
“While media assets have also seen multiple compression, CMCSA is trading at a discount to and as well,” added the analysts.
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