Comcast (NASDAQ:CMCSA) delivered better-than-expected earnings for the first quarter of Fiscal 2023. Following the Q1 earnings beat, CMCSA stock closed over 10% higher on April 27. The company expects to benefit from broadband subscribers’ growth and a higher ARPU (average revenue per user). However, the heightened competitive environment could make it challenging for this global media and technology company to easily add subscribers.
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CMCSA’s CFO, Jason Armstrong, said during the Q1 conference call that the company could return to growth in broadband subscribers over time. Moreover, the company is focusing on protecting and growing its broadband ARPU. He expects strong revenue growth as the year progresses, with ARPU being the key catalyst.
However, Armstrong admitted that the broadband environment is highly competitive, especially at the lower end of the market. Additionally, he expects 2023 to be challenging for growing its subscriber base.
Following the Q1 results, Goldman Sachs analyst Brett Feldman reiterated his Buy recommendation for CMCSA stock. Feldman expects Comcast to consistently deliver low-teens EPS growth through 2026. The analyst believes the company has moved past its peak investment levels in Peacock (a premium direct-to-consumer streaming service owned by CMCSA), which will cushion its bottom line.
Further, the company’s focus on expanding high-margin broadband and business connectivity revenues augurs well for EPS growth. The analyst raised CMCSA’s price target to $45 from $41.
What’s the Prediction for CMCSA Stock?
The expected improvement in broadband subscriber growth, higher ARPU, and mix shift towards higher-margin revenues are positive. However, competitive headwinds and macro pressure on ad spending could pose short-term challenges for CMCSA.
Given the near-term challenges, CMCSA stock has eight Buy and five Hold recommendations, reflecting a Moderate Buy consensus rating. Meanwhile, analysts’ average price target of $43.83 implies a limited upside potential of 8.84%.
