On Wednesday, Evercore ISI adjusted its outlook on Comcast Corp (NASDAQ:CMCSA) stock, decreasing the price target to $46.00 from the previous $48.00, while maintaining an Outperform rating on the shares. The firm pointed to several factors influencing the revised target, including pressures on Theme Parks and conservative estimates for the second half of 2024.
The firm noted that concerns over the impact of the Affordable Connectivity Program (ACP) sunset had not significantly affected the company's recent performance. However, there is an expectation of increased pressure in the third quarter due to non-pay disconnects.
Despite these challenges, the firm expressed optimism as voluntary churn rates were reportedly better than anticipated, and broadband competition remained stable, albeit intense.
Evercore ISI also revised its adjusted EBITDA and free cash flow (FCF) forecasts for 2024 downward, from $38.6 billion to $37.6 billion for adjusted EBITDA, and from $13.5 billion to $12.4 billion for FCF, representing decreases of 2.6% and 8.0% respectively.
These adjustments were made to account for ongoing pressures on Theme Parks, updated sports rights assumptions in the Media segment for the third quarter, and a more conservative view on Cable & Phone (C&P) margins for the latter half of 2024.
Despite the reduction in financial projections and the price target for Comcast, the valuation was described as attractive by the firm, citing an enterprise value to EBITDA (EV/EBITDA) multiple of 6.2x and a free cash flow (FCF) multiple of 11.7x based on their 2024 forecasts.
The firm suggested that a potential re-rating of Comcast's stock might require clearer visibility into improving broadband trends and stability or recovery in the Cable & Entertainment (C&E) segments.
In other recent news, the National Basketball Association (NBA) secured a monumental $76 billion broadcasting agreement with Disney, Amazon (NASDAQ:AMZN), and Comcast, marking a new era in sports broadcasting. This deal, set to span 11 seasons, signifies a more than threefold increase over the NBA's previous broadcasting arrangements.
Meanwhile, Comcast has been the focus of several analyst actions. BofA Securities maintained a Buy rating on Comcast, acknowledging the challenges in the broadband market.
Goldman Sachs (NYSE:GS) initiated coverage on Comcast with a Buy rating, citing potential growth in various segments. However, Seaport Global Securities downgraded Comcast to Neutral due to concerns about broadband subscriber growth trends.
The Federal Communications Commission (FCC) Chair, Jessica Rosenworcel, has demanded that Comcast, among other telecom giants, outline their strategies to combat fraudulent political robocalls using artificial intelligence. The telecom companies have been asked to respond by mid-July.
In corporate governance matters, Comcast's annual shareholder meeting resulted in the election of all director nominees and the ratification of the company's independent auditors. However, a shareholder proposal requesting a report on political expenditures' alignment with company values was not approved.
These are some of the recent developments that have shaped Comcast's business landscape.
InvestingPro Insights
Amid the adjustments to Comcast Corp's financial outlook by Evercore ISI, key metrics from InvestingPro provide additional context for investors considering CMCSA's current standing. With a Market Cap of $151.1 billion and a P/E Ratio that has adjusted to 9.72 in the last twelve months as of Q1 2024, Comcast presents a valuation that may catch the eye of value investors. The company's ability to maintain a Gross Profit Margin of 70.0% during the same period signals robust profitability potential amidst industry challenges.
InvestingPro Tips highlight Comcast's proactive management, as evidenced by aggressive share buybacks and a noteworthy dividend track record, having raised its dividend for 5 consecutive years and maintained payments for 17 years. These actions reflect a commitment to shareholder returns, a sentiment echoed by the high shareholder yield. Additionally, while some analysts have revised earnings expectations downwards for the upcoming period, the company is still predicted to remain profitable this year.
For those seeking deeper insights and additional tips on CMCSA or other investment opportunities, consider leveraging the advanced features of InvestingPro. With the use of coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 9 additional InvestingPro Tips available for Comcast, offering a comprehensive understanding of the company's financial health and market position.
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