Comcast on Morgan Stanley’s List of Best Long-Term Picks

Earnings growth for cable and NBCU forecast
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Investment company Morgan Stanley put Comcast in its "30 for 2019" list of its best long-term stock picks.

The recommendations are based on the sustainability and quality of the companies’ business model and should be good to hold for three years.

“We have tried to identify the best franchises, not the most undervalued stocks. There was no prerequisite that they be rated Overweight, nor specific assumptions about where we are in the economic cycle or any other valuation considerations. Our driving principle was to create a list of companies whose business models and market positions would be increasingly differentiated by 2019,” Morgan Stanley said.

Comcast stood out for having predictable long-terms earnings growth, Morgan Stanley said.

“We see potential upside to estimates in both Cable and NBCU and think shares can work simply by delivering on consensus estimates alone given valuation,” said analyst Ben Swinburne.

“In Cable, we are positive on Comcast’s broadband growth story and see improved results in video given X1. We now estimate Comcast will leverage its product suite and its video bundle customer segmentation - including pushing 'skinny' bundles - to drive slightly positive net video sub adds in 2016,” he said. “Further, we expect programming cost growth to slow as it exits a content cost bubble by 2017, while capital intensity should fall over time as investments roll off. For NBCU, we see potential upside from the Olympics in 2016 and continued momentum in Parks.”

Other companies on the list were: Accenture, Alphabet, Amazon.com, Apple, Blackstone Group, Constellation Brands, CVS Health, Danaher, Dollar General, Estee Lauder, Facebook, First Republic Bank, HCA, IBM, J.P. Morgan Chase, L Brands, Mettler-Toledo, NextEra Energy, Nike, Panera Bread, Philip Morris International, Public Storage, Ross Stores, SBA Communications, ServiceMaster, T-Mobile, Visa, WhiteWave Foods and Zayo Group Holdings.

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