Wells Fargo media analyst Steven Cahall, a long-time Comcast bear, upgraded the cable company but cited growing problems at its NBCUniversal unit as tough times hit the media business.
Cahall raised Comcast to equal weight, noting that at its current price level of about $35 a share, down from a 52-week high of $53.32, Comcast is a fair value. Cable still faces competition from broadband customers and video subscriber losses, but he said he was less worried about Comcast’s capital spending and ARPU.
NBCU’s outlook is more bearish, Cahall said.
“We’re more aggressively cutting numbers at NBCU to bake in 7% annual sub declines, weakness in entertainment scatter ad pricing and peak losses at Peacock,” he said in a report Monday morning.
Cahall expects NBCU’s EBITDA to be down 19% in 2023, similar to the outlook for the linear network businesses at The Walt Disney Co., Warner Bros. Discovery and Paramount Global.
Comcast’s strong balance sheet could benefit NBCU going forward, Cahall noted. Comcast’s cash could help NBC acquire additional sports rights from weaker rivals, he said pointing to the NBA in the near term and more NFL games further down the road.
NBCU could also try to buy Hulu from Disney or take advantage of other consolidation opportunities, he said.
Cahall set a price target of $38 a share for Comcast, which closed at $35.86 on Friday. ■
