Comcast to Spend $2 Billion on Peacock in 2020–2021



On Monday, during the UBS Global TMT Conference, Comcast (CMCSA) CFO Mike Cavanagh provided an update to the company’s investors.

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Comcast at UBS Global TMT Conference

Comcast’s NBCUniversal segment plans to release its Peacock streaming video service in April 2020. In the first two years, Comcast intends to spend about $2 billion on content and marketing for Peacock. Cavanagh believes that Peacock could break even by the fifth year. Peacock is likely to launch with 15,000 hours of content.

According to a December 9 Bloomberg report, “Unlike paid-subscription rivals such as Netflix Inc., Walt Disney Co.’s Disney+ and Apple Inc.’s Apple TV+, Peacock will be free to Comcast cable subscribers. Cavanagh said the service would have various tiers of pricing for others.”

The report added, “Disney has said it plans to spend $1 billion on programming alone for the first year of Disney+, which launched last month and quickly signed up more than 10 million subscribers. Streaming behemoth Netflix heavily outspends its competitors, expecting to splash out $15 billion on programming this year.”

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Financial performance

Comcast reported sales of $26.8 billion in Q3 2019, up 21.2% year-over-year from sales of $22.1 billion in Q3 2018. Its adjusted earnings per share improved from $0.65 in Q3 2018 to $0.79 in Q3 2019. Analysts expect the cable company to post sales of $28.2 billion with adjusted earnings per share of $0.76 in Q4 2019.

In the third quarter, Comcast’s video revenue fell 0.9% YoY (year-over-year) to $5.5 billion due to a decline in video customers. Comcast lost 238,000 net pay-TV customers in Q3 2019 compared to its 106,000 net losses in Q3 2018.

Its total pay-TV subscribers fell 2.8% YoY to 21.4 million through September 30. The company is losing pay-TV customers due to competition from over-the-top service operators like Amazon Prime and Netflix.

Comcast has shifted its focus to the broadband segment, where it is gaining traction amid a falling pay-TV customer base. In the third quarter, the company’s high-speed Internet revenues rose 9.3% YoY to $4.7 billion.

Comcast gained 379,000 net high-speed Internet customers in Q3 2019 compared to its 363,000 net additions in Q3 2018. Its total high-speed Internet subscribers rose 4.9% YoY to 28.2 million through September 30.

Comcast stock: Analysts’ recommendations

Comcast stock offers an upside potential of 20% based on analysts’ mean target price of $51.42. It traded at $42.77 on Tuesday.

Among the 36 analysts currently tracking CMCSA, eight recommended a “strong buy,” and another 22 recommended a “buy.” The remaining six analysts recommended a “hold.” Comcast hasn’t received a “sell” rating in more than 12 months. On Wednesday, Deutsche Bank reduced its target price on CMCSA stock from $54 to $52.

Analysts expect its adjusted EPS to rise 20.8% YoY to $3.08 in 2019. They expect its sales to rise 15.1% YoY to $108.8 billion.

Stock performance

Comcast stock fell 2.55% on Tuesday to close at $42.77. Based on this closing price, the stock is trading at a discount of 9.5% to its 52-week high of $47.27 and a premium of 31.2% to its 52-week low of $32.61.

At yesterday’s closing price, Comcast’s market capitalization was $194.6 billion. The stock has risen 25.6% this year through December 10.

Comcast’s 14-day RSI (relative strength index) score is 37, which signifies that the stock is approaching the oversold zone. On Tuesday, Comcast stock closed near its lower Bollinger Band level of $42.87. This value signifies that the stock is oversold.

Comcast stock closed 3.3%, 4.3%, and 4.0% below its 20-, 50-, and 100-day moving averages of $44.22, $44.67, and $44.56, respectively. Because Comcast is currently trading below the moving average, the stock is trending downward.

Please read Comcast Announces Price Hikes Starting December 18 and Video Services: Comcast versus Dish Network to learn more.


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