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Barclays Raises Its 12-Month Target Price for Comcast

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Yesterday, Barclays increased its target price for Comcast (CMCSA) stock from $45 to $48, which implies a 6.1% return over the next year. Comcast stock closed at $45.23 yesterday with a market cap of $205.57 billion.

Barclays analyst Kannan Venkateshwar reiterated his “overweight” rating for the stock, according to The Fly. It reported the analyst told investors that “cable sentiment remains positive going into Q3 earnings due to expectations of continued strength in unit and pricing growth.” The Fly reports, “While video trends could be weaker, the narrative around video ‘has flipped with investors starting to see this as a positive,’ according to Venkateshwar.” He also raised his 12-month price target for Charter Communications (CHTR) stock, from $259 to $338.

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Analysts’ recommendations

Of the 35 Reuters-surveyed brokerages covering Comcast stock, nine suggest “strong buy,” 21 suggest “buy,” and five suggest “hold.” Their average target for Comcast of $50.38 implies a 12-month return of 11.4% based on Comcast’s last closing price of $45.23. Their average target price is 1.9% higher than their September target of $49.42. MoffettNathanson and Citigroup have also raised their targets for the stock this month, from $43 to $49 and $50 to $56, respectively. Brokers’ average target prices for Comcast peers Charter Communications and Altice USA (ATUS) are $441.52 and $33, respectively, implying 12-month returns of 4.4% and 16.5%.

Comcast stock’s valuation

Comcast is set to post its third-quarter results on October 24. Analysts expect the cable company’s adjusted EPS to rise 13.8% YoY (year-over-year) to $0.74, and its total revenue to rise 21.4% YoY to $26.9 billion. Comcast’s high-speed Internet business could grow strongly in the quarter. The segment’s revenue grew 9.4% YoY in the second quarter. It added 209,000 high-speed Internet customers, compared with 260,000 in last year’s second quarter.

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The company has beaten analysts’ earnings estimates in the last 14 quarters. In the second quarter, Comcast’s adjusted EPS of $0.78 were 4.0% higher than analysts’ estimate of $0.75. With a PE ratio of 14.85x for this year and analysts forecasting the company’s earnings to rise 19.6%, the stock looks cheap. Next year, analysts expect the company’s earnings and sales to grow 11.8% and 5.4%, respectively.

Stock performance

Comcast stock fell 0.70% yesterday and closed at $45.23, 4.3% below its 52-week high of $47.27 and 38.7% above its 52-week low of $32.61. The stock has gained 32.8% year-to-date. Meanwhile, Charter Communications has risen 48.4%, and Altice has risen 71.5%.

Comcast stock is trading 1.5% and 3.3% above its 50- and 100-day moving averages, respectively, and 0.02% below its 20-day moving average of $45.24. Comcast’s relative strength index score has been 52.38 for the last two weeks. The score suggests the stock is neither oversold nor overbought.

Comcast’s upper, middle, and lower Bollinger Bands are $47.08, $45.24, and $43.41, respectively. Yesterday, the stock closed near its middle Bollinger Band, also suggesting it is neither oversold nor overbought.

Comcast’s NBCUniversal segment is introducing a video streaming service, Peacock, next year. Read Comcast: What To Expect from Its Q3 Earnings and Comcast and Oracle Talk Google with Lawmakers to learn more.

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