Comcast: Cable Is Stable And Drives Group Earnings Growth; 26% Below Peak

(Preview) Company Update (CMCSA US) (Buy)

Summary

• Comcast shares have fallen 26% below their peak last September, due to fears about U.S. Cable and a market-wide correction since February.

• We believe the fundamentals of Comcast's businesses remain strong, with its Cable business stable against perceived new competitive threats.

• The smaller NBC Universal business is more mixed, with strong Theme Parks and solid Studios, but headwinds in Media (especially Peacock).

• Free Cash Flow / Share is still $4.44 in 2025 on reduced forecasts. Comcast stock is at a 14.0x P/E and a 7.2% Free Cash Flow Yield.

• With shares at $45.54, we expect a total return of 71% (15.7% annualized) by 2025 year-end. The Dividend Yield is 2.4%.

Introduction

We review our investment case on Comcast Corporation.

Comcast shares are currently 26.3% below their peak in September 2021. While they have still gained 6.7% (including dividends) since we initiated our Buy rating in January 2020, they have lost 10.7% since 2020 year-end.

Investors have been bearish on U.S. Cable …