Is There More Upside to Comcast’s Stock Price?

On February 14, Comcast (NASDAQ:CMCSA) rose 0.04% and closed at $46.09 with a market capitalization of $209.85 billion. The stock is trading at a discount of 3.5% to its 52-week high of $47.74. Comcast stock is also trading at a premium of 23.1% to its 52-week low of $37.44.

So far, the stock has risen about 2.5% on a year-to-date basis as of February 14. The stock has also risen by 23.7% in the last 12 months. Comcast’s strong financial performance is driving its share prices higher. The S&P 500 and the Dow Jones have risen 21.8% and 13.6%, respectively, in the last 12 months. Meanwhile, Charter Communications (NASDAQ:CHTR) and Dish Network (NASDAQ:DISH) stocks have risen 56.6% and 35.1%, respectively.

Analysts’ recommendations for Comcast

Overall, analysts have “buy” recommendations on Comcast stock. Among the 37 analysts that cover the stock, 78.4% recommend a “buy,” while 21.6% recommend a “hold.” None of the analysts recommend a “sell.”

As of February 14, analysts have a 12-month mean target price of $51.34 for Comcast. On February 14, the company was trading at a discount of 11.4% to analysts’ 12-month target price. The stock’s median target price was $51 as of the same date.

On February 4, MoffettNathanson analyst Craig Moffett raised the 12-month target price on Comcast stock to $52 from $49. The analyst has a “buy” rating on the stock. According to a MarketWatch report, “Comcast is too cheap on any reasonable sum-of-the-parts valuation. Moffett continues to have doubts about the prospects for Comcast’s cable networks and the Sky business, but he said the suggestion that NBCU and Sky are worth more than zero seems unlikely to draw much argument.”

Charter Communications stock was rated as a “buy” by 21 out of 34 analysts or 61.8% of the analysts surveyed.

Financial performance

Comcast’s adjusted EPS rose 23.4% YoY (year-over-year) to $0.79 in the fourth quarter, which beat analysts’ average estimate of $0.76. The company’s revenue rose 2.0% YoY to $28.4 billion, which beat analysts’ estimate of $28.2 billion. The YoY consolidated revenue growth was due to the rise in the company’s Cable Communications and Sky revenues. The growth was offset by a revenue decline in the company’s NBCUniversal segment.

In the fourth quarter, the Cable Communications segment’s revenue rose 2.6% YoY due to growth in high-speed Internet, wireless, and business services revenue. However, the video and voice revenue fell in the fourth quarter due to a reduction in its number of subscribers. The advertising revenue fell by 19.0% YoY to $699 million. NBCUniversal revenues fell 2.6% YoY, while Sky revenues rose 0.4% YoY.

Analysts expect Comcast’s sales to rise by 5.0% YoY to $114.4 billion in 2020 and by 1.8% to $116.5 billion in 2021. The company’s sales will likely reach $122.6 billion in 2022. Analysts also expect the company’s non-GAAP EPS to rise by 2.9% to $3.22 in 2020, by 6.5% to $3.43 in 2021, and by 14.9% to $3.94 in 2022.

Comcast is losing video customers

Comcast lost 133,000 residential video subscribers in the fourth quarter compared to 19,000 losses in the fourth quarter of 2018. Traditional pay-TV service operators are struggling to grow their video subscriber base due to competition from video streaming services like Netflix and Amazon Prime.

In the fourth quarter, Charter Communications lost 105,000 residential video subscribers. Meanwhile, AT&T (NYSE:T) lost 945,000 traditional pay-TV customers.

As a result, Comcast’s NBCUniversal segment is preparing to launch a video streaming service called “Peacock” on April 15. Peacock will likely launch with 15,000 hours of content. To learn more, read Comcast Peacock: 3 Things Investors Should Know.

High-speed Internet customers

Comcast is focusing on its high-speed Internet business amid traditional video customer losses. In the fourth quarter, the company’s high-speed Internet revenue increased by 8.8% YoY to $4.8 billion.

Comcast added 424,000 residential high-speed Internet net customers in the fourth quarter of 2019. The company’s residential high-speed Internet net customer additions rose from 323,000 in the fourth quarter of 2018 and 359,000 in the third quarter of 2019. Charter Communications added 313,000 net residential Internet customers in the fourth quarter.

Dividends

Comcast exited the fourth quarter of 2019 with an FCF (free cash flow) of $2.48 billion compared to $2.06 billion in the fourth quarter of 2018. The company has been using its steady FCF to reward investors.

In the fourth quarter, Comcast paid $957 million in dividends—but it didn’t buy back any shares. At the end of February 14, Comcast’s dividend yield was 2.0%.

Comcast stock’s technical levels

On February 14, Comcast closed 2.5% above its 20-day moving average of $44.98 and 3.1% above its 50-day moving average of $44.69. The company was also trading 3.0% above its 100-day moving average of $44.76.

Comcast’s 14-day MACD is 1.55, which suggests an upward trading pattern. Meanwhile, the company’s 14-day relative strength index score of 60 indicates that the stock isn’t oversold or overbought.

On February 14, the stock closed near its middle Bollinger Band level of $44.98, which indicates that it isn’t oversold or overbought.