Comcast (CMCSA) is on a downward trend as analysts predict the stock to decline during the remainder of fiscal year 2012. The bearish market is a factor along with market maturity of the cable industry. As that traditional Cable TV sector continues to lose subscribers the company relentlessly pushes for more incremental revenue per customer. This can be seen in its price bundling strategy. While this strategy props up revenues for the short-term, it does not hold for longer term growth as continued discounting and churn will take effect.
Analyst reviews of Comcast reveal a hold to sell strategy as negative sentiments in operation metrics continue to indicate trouble ahead.
- Broadband revenues will continue to grow since effective competition cannot match the standard Comcast has set in speed, access and reliability. However, with companies like Netflix offering cheaper alternatives in video programming, its cable TV business will decline at a steady pace. Broadband revenues are already surpassing a maturing cable division segment as a top producer.
- An active Department of Justice inquiry into Comcast net neutrality policies regarding its Xfinity Application, tying it to an active company subscription, will draw down on the stock outlook. If this investigation reveals sanctions are in order, which it possibly could, the stock will take a major hit as a result. Comcast's best bet is to settle the issue quickly and move on to more active and competitive scenarios with competitors.
- Recent partnerships such as the Verizon spectrum sale and marketing agreement seem to be a profitable move by Comcast. Not with standing, the controversial deal hoping to bypass regulatory scrutiny is not a done deal. Legislative approval will have to be forthcoming to make the proposed partnership a reality. This is not a foregone conclusion, by any means.
My sentiment is a hold/sell on this stock since hurdles remain for Comcast which may drag out for some time before conclusion. Unless the company can move more quickly to reflect a changing marketplace, which large ones usually do not, CMCSA stock performance remains troubling for the foreseeable future?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.