Comcast is testing institutional investors' patience

Posted Aug 19th 2009 3:40PM by Joseph Lazzaro
Filed under: Comcast Cl'A' (CMCSA), Stocks to Buy

It's a close call, but I'm Reiterating my Buy rating for Comcast Corp. (NASDAQ: CMCSA), first recommended on April 22, 2009 at a price of $14.05.

Comcast's stock has moved sideways, basically, for the last six months, so a caution flag nevertheless has been raised. The stock has straddled the 50-day moving average during that period, suggesting that institutional investors are concerned about Comcast.

A large cable t.v. subscriber bases (24 million), decent balance sheet, financial flexibility, and cost containment help retain the Buy rating, but there is concern, due to the fact that the company's revenue generating unit net additions fell to an all-time low in Q2. That has to reverse as the U.S. recovery begins for institutional investors, and yours truly, to stick with the stock. The First Call FY2009/FY2010 EPS estimates for CMCSA are $1.10 to $1.18.

Stock Analysis: Comcast Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CMCSA now. Under any circumstance, don't buy more than 25% of your CMCSA position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $8.50.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: cable, comcast, tv