Scotiabank raises Comcast stock price target to $45, holds rating

On Tuesday, Scotiabank (TSX:BNS) analyst Jeff Fan updated the firm's outlook on Comcast Corp (NASDAQ:CMCSA), raising the price target to $45.00 from the previous $44.50. The Sector Perform rating remains unchanged. With the stock trading near its 52-week low and showing an 8% decline over the past week, InvestingPro analysis suggests the company is currently undervalued, making it particularly interesting for value investors. Fan's assessment comes as the market anticipates Comcast's new strategy for addressing the challenges in broadband customer retention.

In the first quarter, Comcast is expected to report a loss of 158,000 domestic broadband residential customers. This decline is attributed to lower population growth and competitive pressures from fiber and fixed wireless access (FWA) providers. Despite these losses, the company is projected to see continued growth in broadband average revenue per user (ARPU), although at a slightly decelerated pace due to increased customer acquisition in the lower end of the market. With a robust revenue base of $123.7 billion and an attractive P/E ratio of 8x, the company maintains strong fundamentals. For deeper insights into Comcast's financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and additional ProTips.

The analyst does not foresee year-over-year improvements in net broadband additions until the second half of 2025, even with Comcast's forthcoming strategy rollout. In addition to broadband challenges, Comcast's content and experiences revenue is predicted to face headwinds from reduced theme park attendance, influenced by the recent Los Angeles fires.

Higher marketing and pre-opening expenses for the new Epic Universe theme park are expected to impact profitability in the first quarter. However, these investments are seen as potential catalysts for increased attendance and revenue support later in the year.

Fan also notes that the Spin Co, announced by Comcast's management last year, is progressing as planned and is anticipated to close by the end of 2025. The completion of this spinoff is believed to potentially unlock approximately $5 per share in value for the company.

In other recent news, Comcast Business has finalized its acquisition of Nitel, a managed services provider known for its network-as-a-service offerings. This strategic move aims to enhance Comcast's portfolio in connectivity and secure networking solutions for enterprise clients. Additionally, Comcast Corporation has extended its partnership with USA Gymnastics through 2028, continuing its role as the title sponsor of the Xfinity U.S. Gymnastics Championships and supporting the national teams leading up to the 2028 Olympic Games in Los Angeles. In another development, Comcast Business has expanded its client services in Central Florida and Tampa Bay, aiming to support local enterprises with technology solutions, including secure networking and advanced cybersecurity.

Furthermore, Comcast has appointed Jon Gieselman as Chief Growth Officer for its residential domestic businesses. Gieselman's role will focus on overseeing Comcast's domestic residential businesses, including product and Xfinity brand strategy. In terms of market analysis, BofA Securities has maintained a Neutral rating on Comcast with a price target of $38, citing intense competition in the broadband market as a significant factor. The firm anticipates that the positive impacts of Comcast's new strategies will not be evident until late 2025. These recent developments underscore Comcast's ongoing efforts to expand and innovate across its various business segments.

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