Comcast Posts Modest Q2 Upside As NBCU, Sky Split May 'Drive Acquisition Interest'
Shares of Comcast Corp (NASDAQ:CMCSA) rose in early trading on Friday on the heels of an upbeat second-quarter report, while the stock closed lower by almost 7% amid a wider market selloff.
The Charles Schwab Analyst: Rosenblatt Securities analyst Barton Crockett reiterated a Buy rating and price target of $31.
The Charles Schwab Thesis: While the company’s consolidated financials were slightly higher than estimates, its KPIs (key performance indicators) were broadly in-line with expectations, Crockett said in the note.
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He highlighted the following from Comcast results:
- Revenue grew 4.7% year-on-year to $29.9 billion, beating estimates by about 100 basis points (bps).
- Adjusted EBITDA contracted 5.3% year-on-year to $8.92 billion but topped consensus by 60 bps.
- Adjusted earnings of $1.04 per share, topped estimates by 7 cents per share.
- Free cash flows of $4.6 billion compared well with the year-ago $4.5 billion, despite the investment cycle.
- Returned $2.1 billion to shareholders through $1.2 billion districted in dividends and $900 million in share buybacks.
The analyst noted the KPIs as:
- Broadband subscriptions declined by 167,000, slightly worse than consensus of 164,000.
- Video subscribers were down by 280,000, in-line with expectations.
- Wireless lines rose 448,000, the highest quarterly growth in the company’s history.
While Comcast’s cheaper package rollouts are lowering ARPU (average revenue per user), trends should improve against weaker comps, with retention remaining strong, he further stated.
With expectations remaining low, Comcast is set up to outperform going ahead, Crockett said. The NBCU/Sky split "can drive acquisition interest," similar to what happened with Warner Bros (NASDAQ:WBD), he further wrote.
CMCSA Price Action: Shares of Comcast had risen by 1.79% to $22.31 at the time of publication on Friday.
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