Out of the 33 analysts covering Comcast (CMCSA), 24 analysts have given the stock a “buy” rating, but not a single analyst has given the stock a “sell” rating. Nine analysts have rated the stock a “hold.” Comcast’s better-than-expected first-quarter earnings results on the back of growing Internet customers might have made analysts positive on the stock. Analysts have set a target price of $46.17 for the stock, which implies an upside of 7.5% based on its closing price of $42.93 on April 25.
After Q1 results, J.P. Morgan raised its price target on Comcast stock from $44 to $45, while Cowen and Company has increased the price target to $42 from $41. Morgan Stanley also raised the price target to $48 and maintained its “overweight” rating.
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Why are analysts positive on the stock?
Comcast has recorded upbeat earnings results in the first quarter of 2019 on April 25. However, higher customer losses in the video business amid increasing competition from the likes of Netflix (NFLX) hit the company’s results in Q1 2019. The growing broadband market boosted Comcast’s high-speed Internet business, which added to the growth momentum. Comcast’s addition of European broadcaster Sky, by defeating 21st Century Fox and Walt Disney (DIS), also fueled first-quarter revenues.
View for 2019
Comcast expects its margins to improve by up to 100 basis points, up from the previous expectations of margin growth of up to 50 basis points for 2019. Management continues to expect the Sky acquisition to fuel revenue growth in 2019.
Comcast’s NBCUniversal is also set to roll out its streaming initiative in the first quarter of 2020 amid competition with established streaming players such as Netflix, Amazon (AMZN) Prime video, AT&T’s (T) HBO Now, and others. AT&T’s WarnerMedia, Disney, and Apple are also soon launching their streaming products.
Comcast is also planning to sell its 30% stake in Hulu to Disney, thus giving full ownership of the online streaming service provider’s stake to Disney. Recently, AT&T has also sold its 10% stake in Hulu to Disney.