Comcast Poised For Value Growth - Citi Analyst Is Bullish On Potential Shareholder Returns

Citigroup analyst Michael Rollins maintained Comcast Corp CMCSA with a Buy and raised the price target from $51 to $53.

The analyst updated his model to reflect Comcast's fourth-quarter results. 

Last week, Comcast reported a fourth-quarter FY23 revenue growth of 2.3% year-on-year to $31.25 billion, beating the consensus of $30.51 billion. Adjusted EPS of $0.84 beat the consensus of $0.79. 

Comcast increased its dividend by 6.9% year-over-year to $1.24 per share on an annualized basis for 2024. It declared a quarterly cash dividend of $0.31 per share. The Board also approved a new share repurchase program of $15 billion.

The analyst flagged the prospects for the Comcast asset portfolio to moderately grow revenue and expand margin to support favorable free cash flow generation and elevated returns to shareholders. 

Financial growth will likely be second-half weighted given the anticipated revenue contributions from the Olympics and elections, Rollins said. Broadband revenue growth will come from targeted ARPU expansion. At the same time, he still expects volumes to be slightly negative for each of the following four quarters as a base case, even with T-Mobile US, Inc TMUS anticipating a pull-back in quarterly FWA gains. 

Rollins raised his price target partly on the improvements to his multi-year financial outlook for Comcast.

While he prefers large-cap Telcos to large-cap Cable, Comcast remains the best-positioned Cable firm to improve value over the next 12 months with solid Cable financials and an under-appreciated Content and entertainment segment.

Price Action: CMCSA shares traded higher by 1.29% at $46.71 on the last check Tuesday.

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