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Comcast shares downgraded by Redburn-Atlantic amid broadband pressures

EditorNatashya Angelica
Published 15/02/2024, 09:00 pm
Updated 15/02/2024, 09:00 pm
© Reuters.

On Thursday, Redburn-Atlantic has downgraded Comcast Corp (NASDAQ:CMCSA) from Buy to Neutral. The firm also reduced the price target on the stock to $44 from the previous $50. The revision reflects concerns about the company's broadband segment and market growth challenges over the coming year.

The downgrade comes as the firm anticipates a contraction in the earnings multiple for Comcast due to ongoing broadband pressures. The forecast sees the multiple declining from 9.6x to 9.0x, based on next year's earnings. The analyst cited the increasing dominance of Fixed Wireless Access (FWA) among cost-conscious consumers and a slowdown in market growth as key factors behind the lowered expectations for Comcast's broadband business.

Despite the downgrade, the analyst acknowledged Comcast's potential growth drivers that could support continued earnings before interest, taxes, depreciation, and amortization (EBITDA) growth in the low single digits. Among these drivers, the firm highlighted the expected reduction in losses at Comcast's streaming service Peacock and a positive outlook for the company's theme parks. The launch of the Epic Universal park in the summer of 2026 is notably anticipated to contribute to the company's performance.

Comcast's current situation reflects the broader industry's challenges as it navigates shifting consumer preferences and competitive dynamics. The company's efforts to mitigate these pressures include diversifying its revenue streams and investing in growth areas such as its entertainment parks and digital services.

InvestingPro Insights

Amidst the recent downgrade by Redburn-Atlantic, Comcast Corp (NASDAQ:CMCSA) presents a mixed financial landscape with some robust metrics. According to InvestingPro data, Comcast has a market capitalization of approximately $166.9 billion, underscoring its significant presence in the media industry. The company's Price-to-Earnings (P/E) ratio stands at a reasonable 11.28, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at an even more attractive 10.78. This indicates that the stock may be undervalued relative to its earnings, which could appeal to value investors.

InvestingPro Tips highlight that management's aggressive share buyback program and a high shareholder yield are key considerations. Comcast has not only raised its dividend for 4 consecutive years, but it has also maintained these payments for 17 consecutive years, demonstrating a commitment to returning value to shareholders. Furthermore, analysts predict the company will be profitable this year, having been profitable over the last twelve months.

While some analysts have revised their earnings expectations downwards for the upcoming period, Comcast's status as a prominent player in the media industry and its low price volatility could provide a stable investment opportunity. For investors seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/CMCSA. To access these tips and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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