Comcast cable spin highlights strategic focus, says Morgan Stanley

After Comcast (CMCSA) formally announced what it discussed studying on its Q3 earnings call, namely an intent to execute a tax-free spin of a portfolio of U.S. cable networks, Morgan Stanley analyst Benjamin Swinburne said the the spinoff may be “modest in financial impact to Comcast,” but it should be accretive to the company’s consolidated growth rate and largely neutral to leverage. In addition, the “signal to the market” is that the company’s growth strategy is “more than just optics, but an investment and operating strategy that is informing how the company allocates capital,” the analyst tells investors. While the firm does not see any apparent intent to consider shedding other NBC Universal assets – including Peacock, NBC, the stations, the studio, or the parks – it believes the fact that Comcast is moving forward with this spin “shows an openness to evolving with the market and taking action that the market likely rewards in the multiple,” adds the analyst, who keeps an Overweight rating and $48 price target on the shares.