Comcast Connectivity Captivates: Analysts Boost Expectations Following Impressive Q1 Earnings and Broadband Growth

Keybanc analyst Brandon Nispel maintains Comcast Corp CMCSA with an Overweight, raising the price target from $44 to $46. The analyst raises his estimates and price target after 1Q results and commentary.

CMCSA Connectivity and Platforms segment showed a meaningful upside to Broadband ARPU and EBITDA margins, and capital intensity guidance was flat (~10%). In contrast, Content and Experiences showed significant upside in Theme Parks. 

Nispel believes CMCSA is the crucial large Cable and Telco stock to own, given strong profitability characteristics on Connectivity and Platforms (C&P), differentiated Media assets with Theme Parks, and an FCF profile that should improve in 2024 and beyond, resulting in meaningful capital returned to the shareholder.

Credit Suisse analyst Douglas Mitchelson reiterates Comcast with an Outperform and maintains a $50 price target. Following the 1Q EBITDA feat, the analyst raised 2023 EBITDA, passing through the 1Q Connectivity beat while leaving full-year Content EBITDA little changed. 

Churn remains durably below pre-pandemic levels, and broadband ARPU proliferates, allowing for a natural margin tailwind when paired with Video declines, business connectivity growth, and notable Connectivity cost reduction efforts. 

Results increased confidence that there remains potential EBITDA growth upside for cable companies in 2023 and accelerating growth in 2024. Parks and Studios trends remain strong, and Peacock is at its total EBITDA loss run rate, while linear networks remain highly challenged. 

Overall, visibility is increasing during this challenging year which has elevated broadband competition, macro-driven advertising headwinds, tough political comps, currency and sport cost headwinds at Sky, and peak investment at Peacock.

Raymond James analyst Frank Louthan maintained a Hold rating on Comcast. The analyst expects CMCSA to remain at a lower valuation for some time as the more challenging competitive environment keeps multiples depressed.

While media and entertainment is a significant hedge, broadband sub-trends disproportionately impact shares. He believes the bounce on Thursday had more to do with the expectations going into the print and is likely to reverse in the after-market.

The analyst emphasizes the protection of the ARPU. Subscribers eeked out a positive number in the quarter as CMCSA played with lower-end competitive offers, and he expects these offers will come and go.

In the meantime, Comcast was clear they will do what they have always done — remain willing to cede some share and not re-price the base.

Price Action: CMCSA shares traded higher by 2.66% at $41.34 on the last check Thursday.