For telecom giant Comcast (NASDAQ: CMCSA), the latest earnings report proved a catalyst for huge gains. The company was up almost 9% at one point today but has since given back some of those gains. Comcast’s earnings report was a winner, as the company beat estimates all around. Earnings were $0.96 per share, which readily beat TipRanks projections that called for $0.90. Revenue came in at $29.85 billion against projections of $29.57 billion.
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Comcast is in a pretty solid position and is likely to hold most of that status through a recession. I’m mildly bullish on Comcast. Though I don’t look for it to make many wild legs up in the near term, I do expect a solid recovery once the broader macroeconomic conditions become more hospitable.
Is CMCSA Stock a Buy or Sell, According to Analysts?
Turning to Wall Street, Comcast has a Moderate Buy consensus rating. That’s based on 10 Buys, six Holds, and three Sells assigned in the past three months. The average Comcast price target of $41.50 implies 25.80% upside potential. Analyst price targets range from a low of $30 per share to a high of $51 per share.
Investor Sentiment is Very Positive
While analysts are mostly on board with Comcast, giving it a Moderate Buy, several other investor sentiment metrics are providing support for this company as well. Currently, Comcast has a ‘Perfect 10’ Smart Score on TipRanks. That’s the highest level of “outperform” and the top of the scale as well. That suggests a near certainty that Comcast will outperform the broader market, going forward.
Hedge funds are also looking for a win at Comcast. After four consecutive quarters of decline, hedge funds added 2.6 million shares to their portfolios in the most recent quarter.
Even common investors are looking for a gain at Comcast. The number of TipRanks portfolios that held Comcast was up 1.8% in the last 30 days.
Thus, when we take these points, we see that investor sentiment is bullish and looking for Comcast to make gains.
Comcast: Down, but Hardly Out
Comcast is down about 34% for the year. It’s hardly all doom and gloom at Comcast, though. The company’s latest figures show that it added 14,000 new customers, which is a clear turnaround from Q2. In Q2, the company added no new customers for the first time in its history.
The addition of new subscribers will certainly be helpful. The company already expects some trouble as there will be lower ad revenue due to no Olympic games this year. Plus, a macroeconomic environment that’s increasingly punishing to businesses will likely not lead to enhance advertising spending.
After all, what is there to promote? Businesses are already reducing sales promotions in all but a few cases, so there’s no big sale to advertise. Businesses are also dealing with supply-chain issues and shipping backlogs.
Walmart (NYSE: WMT) canceled a huge stack of orders in September, and it was far from alone in doing so. There’s little sense in promoting a sale that features products the store won’t have anymore, so Walmart’s advertising spending likely won’t be rising.
The good news here is that Comcast has more subscribers. That’s welcome; after all, those subscribers mean cash flow.
Plus, Comcast’s diversification range is giving it a leg up too. The company has subscriber growth in its broadband operations, even if it is modest. However, Comcast found much better growth in its Studio and Theme Park segments. So, while one leg celebrates a recovery over flat growth with modest growth figures, its other legs help support the overall operation.
Conclusion: Diversification and Growth Will Help Comcast Come Back
Make no mistake; Comcast will struggle in the short term. It’s not recession-proof by any means, but it is recession-resistant. Given that most people won’t cancel internet service until it’s down to that or food, the end result should be positive for Comcast.
With Comcast currently selling only slightly above its lowest price targets, it offers a sound buy-in point for those interested. Granted, the company’s Theme Park growth reflects resurging travel demand. Airlines have made great strides recently thanks to that pent-up travel demand coming out, and Comcast’s theme parks are one of the many targets of that travel.
That demand may not last much longer in the face of a declining macroeconomic environment. However, getting in now may secure a position for the company’s likely comeback, which will follow when the overall economy recovers. That’s why I’m bullish on Comcast overall.
