Analyst: Comcast Stock Price Values NBCUniversal at 'Close to Zero'

Barclays Capital's James Ratcliffe says that while "some conglomerate discount is justified for Comcast," the current stock discount is "excessive."

NEW YORK – Barclays Capital analyst James Ratcliffe on Thursday said there is upside in the stock of cable giant Comcast as it values entertainment arm NBCUniversal at “close to zero.”


In essence, at current levels, Comcast investors are getting NBCU for free,” he wrote in a report. “While we have never been huge fans of the NBCU deal and have preferred Time Warner Cable's pure-play strategy, clearly NBCU has some value, particularly given that a number of potential negative catalysts (Olympics deal, Universal joint venture purchase, NBC programming investment) have already passed, and NBCU does have upside potential, particularly in broadcast, even if Comcast isn't able to generate material synergies from the acquisition.”


Raising his price target on Comcast shares by $1 to $28, Ratcliffe, who has an “equal weight” rating on them and a “neutral” rating on the satellite and cable TV industry overall, also argued that while "some conglomerate discount is justified” for Comcast, the current stock discount compared with TW Cable is "excessive."


Earlier in the week, Evercore Partners analyst Bryan Kraft had reiterated his “overweight” rating on Comcast’s stock and $33 target price, but said there is a “good opportunity to own Comcast” for investors.  


“We believe that strong fundamental performance in the cable business, upside to market expectations, an absence of another negative surprise looming in NBCU and an improving capital return profile will lead to a narrowing of Comcast's valuation discount relative to peers,” he wrote.


Kraft added that his financial forecasts do not assume any improvements in the broadcast and film businesses. “Any success in either would be upside to our model,” he said.

Comcast Class A shares rose 2 percent to $24.58 on Thursday.



Twitter: @georgszalai