Next-Gen Broadband, Streaming And Parks Will Open Markets Despite Risks

Key Takeaways

• Simplified bundled offerings and AI-driven home connectivity are set to boost margins, reduce churn, and accelerate growth in both broadband and parks profitability.
  
• Vertical integration, next-gen infrastructure, and a unified content strategy position Comcast to capture expanding streaming, advertising, and value-added home network revenue streams.
  
• Declining legacy video revenue, intense competition, rising costs, and regulatory scrutiny collectively threaten Comcast's growth prospects, profitability, and long-term business model stability.

Catalysts

Operates as a media and technology company worldwide.

• Whereas analyst consensus sees convergence between broadband and wireless driving incremental revenue and retention, the dramatic early uptake of long-term guarantees and gig-plus tiers suggests Comcast's simplified, bundled offerings and superior AI-driven home connectivity could accelerate ARPU growth and materially reduce churn, unlocking higher net margins ahead of current expectations.
  
• While consensus acknowledges the opening of Epic Universe and new park projects as EBITDA positives, attendance and per-cap spending at Universal Orlando are already outpacing targets, and Comcast's pipeline of technologically advanced, branded experiences in the U.S. and Europe could create a multi-year step function in parks profitability and free cash flow, not just incremental gains.
  
• The ongoing digital transformation of media consumption and audience fragmentation is intensifying the value of premium, live, and local content; Comcast's unique vertical integration and aggressive pivot to a holistic NBC/Peacock strategy, including major sports rights, positions it to capture an outsize share of surging streaming/advertising revenues at expanding margins.
  
• Comcast's aggressive and capital-efficient investment in next-gen broadband infrastructure, now further subsidized by recent U.S. tax legislation and government rural broadband incentives, is expected to allow for accelerated network expansion and upgrade cycles, increasing addressable markets and sustaining premium pricing power, boosting long-term recurring revenue and earnings quality.
  
• The proliferation of smart home and IoT devices is driving a structural need for secure, managed high-speed home networks; Comcast's leadership in in-home WiFi, cybersecurity, and device compatibility sets it up to dominate value-added connected services, supporting long-term ARPU expansion and margin leverage beyond traditional connectivity revenues.

Comcast Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Comcast compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Comcast's revenue will grow by 1.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 18.4% today to 10.7% in 3 years time.
• The bullish analysts expect earnings to reach $14.1 billion (and earnings per share of $4.27) by about August 2028, down from $22.9 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.4x on those 2028 earnings, up from 5.2x today. This future PE is lower than the current PE for the US Media industry at 18.6x.
• Analysts expect the number of shares outstanding to decline by 4.66% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.28%, as per the Simply Wall St company report.

Comcast Future Earnings Per Share Growth

Risks

• Ongoing acceleration of cord-cutting and consumer migration to streaming erodes Comcast's legacy video subscriber base, putting sustained downward pressure on recurring revenue streams.
  
• Broadband market saturation and limited new customer additions constrain long-term broadband revenue growth, risking stagnation in the company's core profit engine.
  
• Intensifying competition from tech giants and alternative broadband technologies such as fiber, satellite internet, and fixed wireless increases the likelihood of higher subscriber churn and forces Comcast to keep investing heavily, impacting net margins and capital efficiency.
  
• High content acquisition and sports rights costs, particularly with the addition of high-profile contracts like the NBA, combined with fragmentation in viewership and declining traditional TV ad spend, threaten to compress net earnings and reduce margin resilience.
  
• Persisting regulatory and antitrust scrutiny over broadband monopoly power and media consolidation may result in new restrictions, reduced pricing power, or enforced structural changes, ultimately jeopardizing both revenue growth and operational flexibility.

Valuation

• The assumed bullish price target for Comcast is $49.68, which represents two standard deviations above the consensus price target of $39.77. This valuation is based on what can be assumed as the expectations of Comcast's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $50.0, and the most bearish reporting a price target of just $31.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $131.5 billion, earnings will come to $14.1 billion, and it would be trading on a PE ratio of 14.4x, assuming you use a discount rate of 8.3%.
  
• Given the current share price of $32.51, the bullish analyst price target of $49.68 is 34.6% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.