Comcast: Q3 Net Adds Slowdown Does Not Justify 7% Correction

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

Summary

• We believe the 7.3% fall in Comcast stock on Tuesday represented an overreaction to the CFO's comments on a net adds slowdown.

• Comcast still expects 2021 broadband net adds to be higher than in 2019; Charter's CFO reiterated similar expectations on Monday.

• Some slowdown after the acceleration by COVID is natural. Even 2019 net adds would drive a mid-to-high single-digit cable EBITDA growth.

• Cable broadband has many long-term growth drivers, including homes passed, penetration, and ARPU, all of which remain intact.

• With shares at $57.11, we expect a total return of 46% (12.4% annualized) by 2024 year-end. The Dividend Yield is 1.8%. Buy.

Introduction

We review our investment case on Comcast after shares fell by 7.3% on Tuesday (September 14) following its CFO's comments at an investor conference that referred to a slowdown in net adds. CMCSA stock recovered partially later in the week but remains 7.5% lower than the recent peak 2 weeks ago (at $61.75, on September 2).

We initiated our …