Credit Suisse media analyst Omar Sheikh reinstated coverage of Comcast at “outperform” with a $63 price target, adding in a note to clients that continued demand for bandwidth and its vertically integrated operations remain key competitive advantages for the country’s largest cable operator.
Sheikh noted that Comcast’s continued investment in its network and X1 platform put it in an enviable position to benefit from the increasing demand for bandwidth-consuming broadband services. And its vertically integrated operations – it controls programmer NBC Universal, the Universal Pictures movie studio and theme parks as well as the largest cable distribution network with 22 million customers – “positions the company well for the structural changes underway in video consumption.”
Sheikh also noted that Universal Pictures has one of the strongest film slates in the industry – in August it said it had reached $5.53 billion in box office, the highest-grossing year ever for a film studio – and its strong balance sheet will allow the company to continue investing in the business.
Comcast is scheduled to release fourth quarter results on Jan. 28 and Sheikh wrote that investors will expect to see more evidence of improved cable subscriber metrics (peers like Time Warner Cable have shown video customer gains for the year), and additional information concerning the broadcast incentive auction in the second quarter, of which NBCU is a key potential beneficiary.
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