Comcast & Charter: Raymond James Downgrade Today and Our Response
(Free on Substack) Company Update (CMCSA US, CHTR US) (Buy)
A version of this was also published on my Twitter account.
Introduction: Raymond James downgraded their ratings on Comcast and Charter from Outperform to Market Perform today (Monday, 11 October), following a similar downgrade by Wells Fargo on Friday. Comcast and Charter shares closed down 4.5% and 1.5% respectively. Raymond James’ main concerns were rising competitive intensity and regulatory risks, which we address below.
Downgrade Based on Competition & Regulation Risks
Raymond James’ downgrade was based on fears of more competition from increasing telco fibre overbuilds (these currently cover 42m passings, but Raymond James believe they can add another 45m in the next 3-5 years) and the risk of more Federal Communications Commission (“FCC”) regulations (including potentially on price):
