7/29/2010-UBS issued a note to clients boosting its target price on shares of Comcast (NASDAQ:CMCSA) while reiterating its Buy rating, citing the company strong results and accelerating growth driven by strong ARPU.
UBS analyst John C. Hodulik said, "While RGU growth was softer than expected, Comcast's financial performance beat expectations on higher ARPU, revenue, EBITDA and FCF growth by a good margin. Management expects to close the NBCU deal by YE and is upbeat on the advertising market and the progress made for post-merger planning."
UBS went on to say, "Basic subscriber and broadband adds were both weak and management suggested July results were not showing reacceleration (seasonality usually provides an uptick in Sep). Meanwhile, high margin advertising revenues grew 23% yoy and should remain strong into 2H political spending while organic commercial revenue growth of 45% continues despite the $1.1B annual run-rate."
UBS concluded with its new raised estimates, "We now expect Comcast to grow revenues 4.9% in 2010 and 3.5% in 2011 (prior est. 4.1% and 3.2%) while EBITDA grows ~5% yoy in the same period (slightly ahead of prior est). We maintain our 2010 capex estimate at $4.8B, leaving in $4.9B in FCF but lower our 2011 est to $4.6B from $4.8B on lower capital intensity, driving our FCF estimate up 10% yoy to $5.4B (prior est. +5%)."