Bernstein Research Boosts Comcast Target Price

Better-than-expected performance for core businesses raises price from $26 to $31
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Bernstein Research has raised its target price for Comcast stock from $26 to $31 on better-than-expected performance for Comcast's core businesses, the cable operator's share-repurchase plan that will decrease the number of shares and raise per-share earnings, and because of the NBCU deal--it will be the first report with Comcast/NBCU numbers included on a pro forma basis.

Earnings per share estimates have been raised from $1.46 to $1.55 for 2011, and up from $1.71 to $1.83 for 2012.

Comcast's core business outperformed "almost all metrics" said Bernstein, which calls video businesses "the healthiest" in the cable business. In fact, it had nothing but god things to say: "We believe this reflects Comcast's consistent investment in the quality of its video product. They dominate all other Pay TV providers in the richness of their video-on-demand offerings, their user interface has improved by leaps and bounds, and they have passed all other operators save Cablevision in digitizing their plant."

"Now that the NBCU deal has been completed, with regulatory conditions that were in-line with expectations, much of the uncertainty that has surrounded the stock of late has been removed," said the analysts. "Comcast is also combining with NBCU at a relatively advantageous time, benefiting in particular from the advertising recovery which has unfolded since the deal was first announced."

The increased valuation also benefited from FCC conditions that the analysts said held no meaningful surprises. "The FCC largely stayed away from the more onerous terms governing the provision of NBCU content to online video providers that had been speculated upon in the months leading up to deal completion," they said.

Bernstein raised Comcast's target price to $26 only last December on expectations of the deal, but this is it first "pro forma" rating that combines the values of the two companies.

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