It’s time to take another look at Comcast , according to Citi. Analyst Michael Rollins upgraded shares of Comcast to buy from neutral, saying that cable companies broadly have some advantages despite the challenges they face. “We believe the recent cable share price underperformance is likely getting ahead of third quarter results that are likely to reinforce this new reality that cable firms are going ex-growth on revenue growth,” Rollins wrote in a Wednesday note. “However, we also see an increasing likelihood that the cable firms promptly respond to stabilize or improve value for shareholders,” Rollins added. Cable companies have broadly come under pressure this year as investors question whether they can continue to grow subscriptions next year while competing with streaming. According to the note, Citi expects cable companies will maintain a “relatively flat broadband base” through 2025, compared to prior expectations of an average annual growth rate of about 1%. Still, Comcast, which is down 43% this year, has “opportunities to sustain favorable cash flow generation, monetize non-core investments,” and reinvest into strategic new goals for its business, according to Rollins. “[We] believe the cable firms are more likely to retain the potential to outperform our EBITDA expectations relative to revenue, given the favorable margin mix shift towards broadband and business services,” the analyst said. The analyst lowered his price target on the stock to $36 from $42. That’s still roughly 25% above Wednesday’s closing price of $28.69. Shares of Comcast rose 1.6% in Thursday premarket trading. The analyst also upgraded cable companies Altice USA to buy, and maintained Charter at neutral. —CNBC’s Michael Bloom contributed to this report. Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC.
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