One day after Comcast (CMCSA 12.90%) published its latest set of quarterly results, an analyst's downgrade put the hurt on the stock. It suffered a nearly 13% decline on Friday, in sharp contrast to the healthy gain it posted on earnings day.
Time for a downgrade
Comcast scored a double beat on the consensus pundit estimates for its first quarter, but not all of those analysts were impressed by the feat. Before market open Friday, Deutsche Bank's Bryan Craft downgraded his recommendation on the media company's stock to hold from his preceding buy. He also shaved his price target to $34 per share from $35.
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According to reports, Craft's new view is based on his reduced estimates for earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow (FCF) from 2027 onward. While he acknowledged that Comcast did better than many expected in that inaugural quarter, he doubts this can be repeated across the coming periods.
Craft cited stiff competition in the broadband segment as another headwind, and said that with its recent price appreciation, the company's stock wasn't as compelling as it was previously.
NASDAQ: CMCSA
Key Data Points
Not the biggest fish in the sea
Media stocks can be very up-and-down, and with the recent Paramount Skydance blockbuster deal for Warner Bros. Discovery, we're in one of the more volatile times.
Comcast is now looking like something of a minnow next to the whale that will be the combined Skydance/Warner Bros. And despite a presence in the theme parks segment (with its Universal parks), I don't think it's differentiated enough to be compelling at its current valuations. I wouldn't be a buyer of the stock.
