Comcast Faces Headwinds: Analysts Adjust Expectations Amid Broadband Struggles and Theme Park Downturns

Comcast Corporation CMCSA shares are trading lower after the company reported worse-than-expected second-quarter sales results yesterday.

The company reported a revenue decline of 2.7% year-over-year to $29.69 billion, missing the analyst consensus estimate of $30.02 billion and adjusted EPS of $1.21, beating analyst consensus estimates of $1.12.

BofA Securities analyst Jessica Reif Ehrlic reiterated a Buy rating with a price target of $50.

Although it’s early in the quarter and most ACP activity will be in the third quarter, the analyst is reducing the broadband net loss forecast to -150k from -165k due to positive customer response, Comcast’s targeted segmentation, and favorable seasonality.

Ehrlic revised the 2024 broadband net loss forecast to -415k (from -485k). For C&P, revenue is expected to be flat (0.0%) with a 1.5% EBITDA increase (previously 1.3%), and C&E revenue growth is revised to 2.1% (from 5%) with an 8% EBITDA decline (previously 2.8% growth) due to lower Theme Park and Media forecasts, especially from reduced Olympic profitability.

The analyst now projects 2024 EBITDA to be flat (previously 1.1% growth), EPS is updated to $4.20, and FCF is revised to $11.1 billion.

KeyBanc Capital Markets analyst Brandon Nispel reiterated the Overweight rating and lowered the price target to $44 from $45.

The analyst writes that near-term catalysts are elusive, with challenges in Theme Park growth and Peacock loss improvement due to lower domestic park attendance and the NBA contract.

Nispel writes that they remain positive on CMCSA’s efficient Broadband operations and modest growth, though short-term subscriber trends are challenging and recovery timelines are pushed out.

The analyst expects low-single-digit operating cash flow growth, reduced capital spending in 2025, and FCF growth (excluding one-time Hulu tax payments), which should lead to shareholder returns despite ongoing competitive challenges.

Oppenheimer analyst Timothy Horan reaffirmed the Outperform rating with a price target of $55.

The analyst writes that main concern is high broadband losses due to increasing FWA/fiber competition, impacting Video/Voice subscribers.

While the company offers aggressive bundled promotions, the analyst adds that it remains focused on FCF generation. He projects subscriber trends to remain volatile in the near term.

Investors can focus on the stock via Simplify Exchange Traded Funds Simplify Next Intangible Value Index ETF NXTV and IShares U.S. Telecommunications ETF IYZ.

Price Action: CMCSA shares are down 1.58% at $37.90 at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Wikimedia Commons

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