The storm passes - returning to Overweight
With the bulk of the M&A storm behind us, we are upgrading Comcast to Overweight. When we downgraded in May, our primary concerns were 1) a bidding war for Fox and Sky could lead to a dramatically stretched balance sheet but Comcast has now pulled out of the race for Fox, 2) investors in "old" Comcast would own something starkly different to what they had originally purchased leading to meaningful shareholder rotation and 3) Comcast's willingness to so stretch its balance sheet implied a weak outlook for NBCU, but we now see a plan B for this unit. In addition broadband trends were worrying but have since improved dramatically as the company embraces standalone services while mobile is also seeing excellent traction. We are lifting our PT from $34 to $42.Comcast is a media and technology company. The company's segments are: Cable Communications, which provides internet, video, voice, and security and automation services in the United States individually and as bundled services at a discounted rate over its cable distribution system to residential and business customers; NBCUniversal, which includes a portfolio of national cable networks that provide a variety of entertainment, news and information, and sports content, regional sports and news networks, international cable networks, and cable television studio production operations; and Sky, which owns a portfolio of pay television channels that provide entertainment, news, sports and movies.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
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