CONFERENCE CALL REPLAY | U.S. CABLE: DOWNGRADING TO NEUTRAL - WILL THE BROADBAND BURDEN BE TOO HEAVY TO BEAR?
June 27, 2017 7:00 AM PDT / 10:00 AM EDT
The notion that cable operators have an advantaged infrastructure was once contrarian but is now fully mainstream. And the view that cable operators have latent pricing power that will insulate them from the vagaries of changing video consumption habits has become broadly mainstream as well. Cable stocks have risen sharply, to the point that Comcast shares now sit just 7% below our target price of $45. That the cable companies are very, very good businesses is no longer a secret. In a clients-only conference call on Tuesday, June 27th, Craig Moffett discussed our recent downgrade of Comcast and the Cable Sector to neutral, and examined both the accelerating decline in traditional linear TV and the early evidence for deceleration in broadband subscription growth. We have often written that the cable operators are uniquely positioned to weather a decline in Pay TV subscriptions by adjusting broadband pricing in response. That’s still true. But the question is: just how much will they have to adjust broadband pricing? And what is the right valuation if they do?
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