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Comcast May Have More Upside Ahead With Earnings Set To Surge In 2022

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Media stocks, including Comcast (CMCSA), have been on a hot run as of late. The cable and telecom giant and parent company of media powerhouse NBCUniversal, has been trending upwards in recent months.

Much of this is due to the overall stock market “melt-up”, but its exposure to the video streaming sector has played a role as well. With the launch of NBCUniversal’s Peacock service, the company now has its own contender in the “streaming wars.”

A few years back, it seemed tech names like Netflix (NFLX) would dominate this space, but the legacy media conglomerates have aggressively moved into this area.

Disney (DIS) are crushing it with Disney+, ESPN+, and Hulu, together with Viacom’s (VIAC) Paramount+ and Pluto TV platforms. While competition is heating up, growth from streaming may give Comcast a nice earnings boost, and in turn, additional runway for its stock.

CMCSA Stock And Its Streaming Catalyst

Comcast is anything but a streaming pure play, and with its massive cable and telecom unit, it’s not exactly a media pure play either. But while it has a lot of moving parts, this most newsworthy catalyst is expected to be what makes or breaks the stock’s performance in the near-term.

How can Comcast’s exposure to streaming help CMCSA stock? As the nascent service adds additional subscribers and starts to make a larger impact on the company’s bottom line, Peacock could continue to move the needle for CMCSA shares.

There are growing signs that this is going to happen. The company is ending many of its third-party licensing deals and according to recent headlines, movies from its Universal library that are currently streamed on Netflix and AT&T’s (T) HBO Max may get pulled, and moved over to its in-house platform.

By making more of its content Peacock-exclusive, subscriber growth could get a significant boost. This would increase investors’ confidence in analysts’ projections for double digit earnings growth in 2022, which in turn, could further boost its stock price.

Reasonably Priced Given Next Year’s Earnings Surge

At around 19.4x forward earnings, CMCSA is moderately priced, but considering earnings estimates for 2022, current valuations may be more than reasonable.

Next year, Comcast’s earnings per share (EPS) are expected to rise 26.7%, from $2.83 to $3.58. Assuming the stock doesn’t benefit from any multiple expansion and maintains its current P/E ratio, shares may be able to get close to the $70 per share price level.

But if Peacock’s success is even greater than expected, Comcast stands to see further boosts to its bottom line and moves to even higher price levels may be possible.

Streaming-centric plays have been running hot recently and although this could reverse in the short-term, the underlying trends remain and further gains in the coming twelve months may be more than attainable.

What Analysts Are Saying About CMCSA Stock

According to TipRanks’, CMCSA stock comes in as a Moderate Buy based on 2 analyst ratings with 15 Buys, 4 Holds and 1 Sell.

As for price targets, the average analyst price target on CMCSA stock today is $61 per share, implying around 12% upside potential from current prices. Analyst price targets range from a low of $48 per share to a high of $70 per share. (See Comcast stock analysis on TipRanks)

Bottom Line: The Party’s Far from Over Yet For Comcast Stock

Streaming trends helped boost the performance of CMCSA stock, but there’s room for another double-digit percentage move higher. As Peacock continues to meet expectations, the company looks set to hit earnings projections in the coming year.

Short-term pullbacks are a possibility, but investors may find CMCSA to be one of the more attractive streaming plays out there.

Disclosure: Thomas Niel held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.