Industry-leading scale, best execution and NBCU upside
We are adding Comcast to our US 1 list. Comcast offers industry-leading scale,
best-in-class execution, and an NBCU (Entertainment company) division showing
consistent and improving signs of a turnaround; for a recap of Comcast’s 2Q, see
Comcast Corp: ‘Despicably’ consistent (again) 31 July 2013
Leading innovator amongst cable operators
Comcast has become an innovative, entrepreneurial and nimble company with
leading-edge consumer-friendly technology as evidenced by its X1/X2 platforms.
The company will soon roll out the second generation (X2) of its cloud-based
entertainment operating system, which has features including improved search,
recommendation engine, voice activation, etc. , is working closely with Verizon to
develop mobile video solutions, is building (and launching) a vast network of Wi-Fi
hotspots and will offer 1Gbps+ HSD connections in the not-too-distant future.
Comcast is leveraging its leading scale, flexible and robust infrastructure as well as
its “top of the class” innovation to generate differentiated results vs. its cable peers.
(Yet the stock, inexplicably, lags the broader group.) Video losses have been
minimized and are improving, while HSD net adds have grown Y/Y for 10 of the last
11 last quarters; in addition, the company has consistently grown its voice business.
Comcast’s business services (SME) segment is projected to grow at a 23% CAGR
(2012E-2017E), with upside. Additionally, NBCU has shown promising signs of an
Reiterate Buy and $60 PO
Comcast is one of our favorite stocks across our universe due to: 1) industry-leading
scale; 2) unparalleled execution; 3) a conservative, yet lucrative approach to its
capital structure which leaves ample room for shareholder returns; 4) a
management team second-to-none; 5) attractive valuation and 6) significant upside
in each and every NBCU division. We strongly reiterate our Buy rating on Comcast