Q2 Preview: Sub Losses Starting to Ebb for Comcast (CMCSA); Analysts Expect More Upside

Shares of cable provider Comcast Corp. (Nasdaq: CMCSA) are lower Tuesday ahead of the company's second-quarter earnings release, due out Wednesday before the market opens.

Comcast is expected to report earnings of 41 cents per share on revenue of $13.83 billion. Earnings would be a 21 percent sequential gain, though only a modest 3 percent increase from the same period last year.

Comcast shares gained 3 percent in the quarter and are down 8.6 percent since. The stock is up 6.4 percent on the year. Shares have traded in a range of $16.76 to $27.16 over the last 52-weeks, meaning analyst price targets generally suggest more upside.

Time Warner Cable (NYSE: TWC) reported a slight decline in total primary service units last quarter. More subscribers moved to Time Warner's more expensive Triple Play package, though overall customer relationships fell by 14,000.

For Comcast, this will be the first full quarter after gaining a controlling stake in NBCUniversal. Analysts are expecting sub losses to continue flattening.

Data from Bloomberg has 20 analysts with a Buy rating, eight at Hold, and one recommending to Sell. The price target average is $30.30, with a low of $27 and high of $34.

Analyst Comments

• Maxim Group recently called Comcast it's "favorite big-cap media stock" heading into earnings. Though many prefer Time Warner for its juicier dividend and bigger buybacks, Maxim thinks Comcast is managing assets well and exploring better options with the acquisitions of theme park stakes. Click here for more on that report.
  
  
• Deutsche Bank is looking for earnings of 41 cents per share on revs of $14.245 billion in revs. Deutsche is firm on its estimate of 210,000 basic cable sub losses. "This is perfectly reasonable performance, in our view, representing a 55k Y/Y improvement, right in line with 1Q’s 43k improvement and leaving Comcast as the only major cable operator showing material, consistent video loss improvement. We see 120k HSD adds, up 2% Y/Y, and voice of 200k, -13% Y/Y, both moderating modestly from 1Q’s pace. We see cable sector-leading 5.6% revenue and 6.5% EBITDA growth."
  
  
• Brean Murray Carret & Co. sees earnings of 41 cents per share on revs of $13.8 billion. "This is perfectly reasonable performance, in our view, representing a 55k Y/Y improvement, right in line with 1Q’s 43k improvement and leaving Comcast as the only major cable operator showing material, consistent video loss improvement. We see 120k HSD adds, up 2% Y/Y, and voice of 200k, -13% Y/Y, both moderating modestly from 1Q’s pace. We see cable sector-leading 5.6% revenue and 6.5% EBITDA growth." The firm sees Comcast's cable ops doing better than Time Warner's, which should be a welcome sign for investors.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.

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