How Comcast Stacks Up in the Streaming Wars

In April 2020, Comcast’s (CMCSA) NBCUniversal segment plans to launch an online streaming video service called Peacock. The service expects to launch 15,000 hours of programming and should host premium shows like The Office.

Comcast’s Peacock streaming service

Comcast’s Peacock streaming service could include a free version. According to CNBC’s November 1 report, “Comcast’s NBCUniversal is considering making an ad-supported version of its upcoming Peacock streaming service free for everyone, bucking the trend of charging for streaming products.” Plus, the company’s ad-free version would be available for an additional charge.

The report cited NBCUniversal CEO Steve Burke, who noted, “Peacock will air between three and five minutes of ads per hour of programming.” Burke continued, “NBC expects to make $5 per month from every user on the service from advertising.”

Previously, Comcast had planned to offer the Peacock service free only to the company’s cable or high-speed broadband customers.

Online streaming market attracting new players

Comcast’s Peacock streaming service faces competition from Netflix (NFLX), HBO Max, Disney+, and Apple TV+. Apple (AAPL) launched Apple TV+ on November 1, and Disney (DIS) launched Disney+ on November 12. Plus, AT&T’s (T) WarnerMedia division is launching its video streaming service, HBO Max, in May 2020.

Apple TV+ is priced at $4.99 per month and would be available free for 12 months to all new Apple device purchasers. Plus, Disney+ is priced at $6.99 per month or $69.99 a year. This service would be available free for 12 months to some of Verizon’s wireless customers. Additionally, HBO Max is priced at $14.99 per month and would be available free to about 10 million existing AT&T customers.

Netflix, which leads the video streaming space, has a monthly subscription fee of $8.99. At the end of September, Netflix had around 158.3 million paying customers globally.

Comcast’s pay-TV customer losses

As online streaming services rapidly add subscribers, traditional pay-TV operators are losing subscribers. In the third quarter, Comcast lost 238,000 traditional video customers.

Wall Street expected Comcast to report net losses of 203,000 traditional video customers. In Q3 2018, it lost a net of 106,000 traditional video subscribers. Comcast ended Q3 2019 with 21.4 million traditional video customers, down 2.8% year-over-year (or YoY).

Charter Communications (CHTR) and AT&T lost 75,000 and 1.2 million traditional video customers, respectively.

Comcast’s Q3 earnings

In the third quarter, Comcast reported revenues of $26.83 billion—up 21.2% year-over-year. The company reported non-core earnings per share of $0.79, up 21.5% YoY. Notably, Wall Street analysts expected the company to report adjusted EPS of $0.75 on total revenue of $26.77 billion.

In the third quarter, Charter Communications reported adjusted EPS of $1.74 on revenue of $11.5 billion. Meanwhile, Dish Network (DISH) reported adjusted EPS of $0.66 on revenue of $3.2 billion.

Analysts’ recommendations and target prices

Among its competitors, Comcast has the most “buy” ratings. On November 12, about 83% of the analysts surveyed by Reuters rated Comcast as a “buy,” while the remaining 17% rated it as a “hold.” Comcast’s average target price of $51.14 implies about 13% upside potential from the current price levels.

Approximately 37% of analysts surveyed by Reuters rated Dish as a “buy,” and 37% rated it as a “hold.” The remaining 26% rated it as a “sell.” Dish’s average target price of $41.79 implies about 16% upside potential from the current price levels.

About 33% of the analysts surveyed by Reuters rated Charter Communications as a “hold.” Plus, 3% of these analysts rated it as a “sell,” and the remaining 64% rated it as a “buy.” Charter’s average target price of $490.30 implies about 4% upside potential from the current price levels.

Stock returns

On November 11, Comcast closed the trading day at $45.25. Based on the last closing price, the stock’s moving averages are as follows:

  • The stock is 0.2% above its 20-day moving average of $45.17.
  • Comcast stock is 0.3% below its 50-day moving average of $45.40.
  • The stock is 1.9% above its 100-day moving average of $44.41.

Currently, Comcast is trading 38.8% above its 52-week low of $32.61 and 4.3% below its 52-week high of $47.27. The stock generated a return of 18.0% in the trailing 12-month period, -0.7% in the last month, and 3.1% in the trailing five-day period. Year-to-date, the stock has returned 32.9%.

Comcast’s 14-day MACD is 0.13, which suggests an upward trading pattern. The company has a 14-day relative strength index (or RSI) level of 53, which implies that the stock is neither overbought nor oversold.

To learn more, please read Google: Comcast Challenges the Digital Ads Market.