Comcast (CMCSA) reported its third-quarter results before the markets opened on Thursday. The company’s adjusted EPS rose 21.5% year-over-year to $0.79 in the quarter, beating analysts’ average estimate of $0.75. Comcast’s revenue rose 21.2% YoY to $26.83 billion, exceeding analysts’ estimate of $26.77 billion.
During the company’s earnings call, Comcast CEO Brian Roberts noted, “From my perspective, 4 things stood out as we wrapped up the quarter: our incredible strength in broadband; the enduring popularity of our premium content; our strong global footing just 1 year after the Sky acquisition; and how the combination of these things puts us in a unique position to compete, including in the streaming market.”
Analysts’ price targets for Comcast
On Thursday, Cowen and Company and Guggenheim raised their price targets for Comcast stock, from $44 to $46 and $52 to $57, respectively. RBC also raised its price target for CMCSA from $42 to $44. Similarly, J.P. Morgan announced a price target of $51 on Comcast stock for December 2020 with an “overweight” rating.
According to Wall Street analysts, Comcast stock has a mean price target of $50.69, suggesting an estimated upside of 13.0% for the next year. Of the 36 analysts covering Comcast, 21 recommended a “buy,” nine recommended a “strong buy,” and six recommended a “hold.” None of the analysts recommended a “sell” on October 24.
Growth in key metrics
In the third quarter, Comcast reported better-than-expected high-speed Internet customer growth. The company added net 379,000 high-speed Internet customers, surpassing analysts’ expectations of 344,000 net additions.
In the third quarter, revenue from the high-speed Internet segment rose 9.3% YoY to $4.7 billion. The company gained a net of 363,000 high-speed Internet customers in Q3 2018. The company ended Q3 2019 with a total of 28.2 million high-speed Internet customers, up 4.9% YoY.
In September, Comcast announced that its Xfinity Flex product would be available at no cost to all of its US Internet-only customers. The company previously charged those customers $5 per month.
However, the company lost a net of 238,000 pay-TV customers, missing analysts’ expectation of 203,000 net losses. In the third quarter, revenue from the video segment fell 0.9% YoY to $5.5 billion.
The company lost a net of 106,000 pay-TV customers in Q3 2018. The company ended Q3 2019 with a total of 21.4 million pay-TV customers, down 2.8% YoY. Comcast is losing pay-TV customers due to stiff competition from low-cost streaming video services like Amazon Prime Video and Netflix.
Peacock streaming service
Comcast’s NBCUniversal segment reported revenue of $8.30 billion, down 3.5% YoY. In April 2020, NBCUniversal plans to launch a video streaming service called Peacock. The new service is likely to be launched with more than 15,000 hours of content. Next month, Disney plans to launch Disney+, and Apple plans to launch Apple TV+.
Comcast has delivered YoY improvement in consolidated adjusted EBITDA of $8.55 billion in the third quarter, up 7.4% YoY. Its adjusted EBITDA increased 6.8% for the Cable Communications segment, while its adjusted EBITDA for the NBCUniversal segment grew 1.7% YoY in Q3 2019.
Charter Communications (CHTR) plans to report its third-quarter earnings on October 25. CHTR stock is up 52.7% year-to-date. Based on estimates, Charter Communications is likely to report earnings per share of $1.66 in the third quarter. This represents an increase of 22.1% compared to Q3 2018.
Dish Network (DISH) expects to release its third-quarter results on November 5. DISH stock is up 36.8% year-to-date. Based on analyst estimates, DISH is expected to report EPS of $0.61 in the third quarter. This represents a decrease of 25.6% compared to Q3 2018.
Twenty-one of 33 analysts covering Charter Communications rated its stock as a “buy.” CHTR’s mean price target of $446.67 implies a 2.7% upside from the current level. Seven of 19 analysts rated DISH stock as a “buy.” DISH’s price target of $42.50 implies a 24.5% upside potential.
How is Comcast stock placed?
Comcast’s stock price fell 1.9% on October 24. However, Charter Communications and DISH’s stock prices fell 0.1% and 2.2%, respectively, on the day.
Comcast stock is trading 0.4% and 0.6% below its 20- and 50-day moving averages, respectively. It’s also trading 1.7% above its 100-day moving average of $44.07. Comcast’s 14-day relative strength index (or RSI) score is 46, which suggests that the stock is neither overbought nor oversold.
Comcast’s upper, middle, and lower Bollinger Bands are $46.33, $45.04, and $43.75, respectively. On Thursday, the stock closed near its middle Bollinger Band, suggesting that it’s neither overbought nor oversold. On October 24, Comcast’s dividend yield was 1.87%.
With a PE ratio of 14.6x for this year and analysts forecasting the company’s earnings to grow 20%, Comcast stock looks cheap. Next year, analysts expect the company’s earnings and revenues to grow 11.4% and 5.4%, respectively.