Market Uncertainty? No Problem For Comcast Investors, Brean Says

J.D. Singh

Wed, Jul 1, 2015, 5:55 AM

In a report published Wednesday, Brean Capital analyst Todd Mitchell maintained a Buy rating on Comcast Corporation (NASDAQ: CMCSA), while raising the price target from $67 to $69.

Comcast is poised to generate high single-digit OCF growth and double-digit EPS growth in 2015. The company is also expected to report 2Q15 revenues of $17.9 billion and EPS of $0.83.

"We believe Comcast offers investors an attractive vehicle for a market characterized by increased uncertainty," analyst Todd Mitchell mentioned.

The company's better-than-expected performance is likely to be driven by the record box office opening of Jurassic World and the consequent benefit to Filmed Entertainment. "This should offset lower expected growth of 1% from broadcast networks and a 5% drop at Cable Networks, with both facing tough comps," Mitchell added.

The robust performance of Comcast's Filmed Entertainment and Theme Park business is expected to continue through the rest of this year and boost the profitability of the Broadcast network. Comcast's 2Q15 cable margins are, however, expected to come under pressure due to high programming and marketing costs.

According to Brean Capital estimates, the company is now expected to record a 6 percent increase in its cable revenues to $11.7 billion, from $11.0 billion a year ago, while its OCF is expected to grow 5 percent to $4.79 billion, down from the previous estimate of $4.84 billion.

In the research note Brean Capital noted, "With increased uncertainty signaling upward pressure on interest rates, we believe shares of CMCSA will be perceived as an increasingly attractive alternative to its peers, which have captured the market's attention due to a sexier M&A story, but in reality face greater capital investment requirements and higher leverage."

Latest Ratings for CMCSA