Universal Pictures has the summer's hottest movie. Comcast investors aren't celebrating, reinforcing the case for the company's plan to spin off its entertainment assets from its slower-growing cable and broadband business.
Director Christopher Nolan's The Odyssey is packing theaters, racking up more than $120 million in domestic ticket sales this past weekend, a big win for Universal, which followed Nolan's 2023 smash Oppenheimer. You wouldn't know it from looking at Comcast's stock price. The media conglomerate's shares started Monday in the red, before recovering to gain 0.3% to $23.84.
The reason: Investors are far more concerned about Comcast's cable and internet businesses, which are a lot less glamorous but generate about 60% of its $130 billion in annual revenue. Those units have been under siege as customers drop cable plans and switch internet service to competing offerings from phone companies. As if that weren't enough, SpaceX's Starlink satellite internet service may soon offer customers yet another alternative.
Shares of Comcast are down about 15% this year and trade at just 6.7 times forward earnings, one of the lowest valuations in the S&P 500, according to FactSet. Investors will get their latest read on the situation when Comcast reports second-quarter earnings on Thursday. Wall Street isn't optimistic. The average analyst forecast calls for sales to decline 3.6% to around $29.3 billion, with earnings per share falling nearly 18% to 97 cents, according to FactSet.
"Expect broadband competition to pressure" average revenue per user, wrote RBC Capital Markets analyst Jonathan Atkin in a note Sunday. "We believe Comcast can no longer afford to cede market share." Atkin rates the stock sector perform, with a $27 price target, about 13% above Monday's price.
Of course, Comcast is doing what it can to help its entertainment assets -- which also include the NBC television network, Peacock streaming service, and Universal Orlando theme park -- shine. The company said last month that it plans to spin off these units into a separate company next year, a move that was broadly cheered, especially since it sparked speculation that one or both companies could become merger or takeover targets.
Comcast's studios and theme park businesses both saw revenue growth last year. The company has already taken steps to shore up its television business by spinning off cable networks into Versant in January. Meanwhile, executives have hinted that its six-year-old streaming service Peacock may finally turn profitable in the second quarter.
Given how widely Comcast's troubles are known, some investors think the stock finally looks attractive.
"Should Comcast be one of the five cheapest stocks in the S&P 500? Probably not," wrote Benchmark Equity Research Matthew Harrigan in a note Monday.
He rates the shares a Buy with a $44 price target, implying upside of more than 80%.
Harrigan notes the success at Peacock and argues the threat from SpaceX is overblown, given all the uncertainty around its technology. "Eventual effects from more competitive Starlink broadband...later in the decade really cannot be definitively ascertained even by the companies involved, " he wrote.
He argues that Comcast stock is so cheap that, assuming a roughly $65 billion valuation for Comcast's upcoming entertainment spinoff, the market's price for the cable and broadband unit seems to imply an Ebitda decline of 25% a year for the business after 2030, according to his calculations. It's a scenario that appears too grim for one of the market's most beaten-up stocks, he argues.
Write to Ian Salisbury at ian.salisbury@barrons.com
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July 20, 2026 16:05 ET (20:05 GMT)
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