In a move that is likely to affect stock prices this morning, influential media analyst Craig Moffett downgraded the cable distribution sector to “neutral” Tuesday, adding that after a long bull run the stocks are fairly valued.
In his report Moffett noted that industry leader Comcast stock has nearly tripled over the past five years and Charter, the second largest cable company in the country has quadrupled. With those stocks besting the S&P 500 by 90 and 260 percentage points, respectively, “the room for a differentiated upside forecast has narrowed,” Moffett wrote.
Comcast, at $41.80 per share is just 7% off Moffett’s 12-month target price of $45 per share and Charter, at $340.26 is above his $337 target.
Moffett has said repeatedly that the cable sector has managed to offset subscriber declines in the video portion of the business through gains in broadband. And while he expects that to continue—Comcast actually gained video customers last year for the first time in a decade—he wondered if broadband pricing is sustainable.