Q1 Preview: Comcast (CMCSA) May See Challenges from NBCU, Traders Eye Margins

Comcast Corp. (Nasdaq: CMCSA) shares are acting well heading into the company's first-quarter report, expected out before the market opens Wednesday.

Analysts currently expect Comcast to report earnings of 42 cents per share on revenue of $14.43. Numbers compare with EPS of 47 cents and revs of $15.0 billion reported last quarter and EPS of 36 cents on revs of $13.3 billion reported in the same period last year.

Shares of Comcast rose 26.6 percent in the quarter to $29.85 at the end of March. Comcast shares were up 13 percent in the same period during 2011. Comcast stock is about 2.8 percent better since the end of the quarter.

Investors might look at reports from Disney (NYSE: DIS), GE (NYSE: GE), DISH Networks (Nasdaq: DISH), or DIRECTV (Nasdaq: DTV) for an indication about what Comcast might be producing. Overall, first-quarter earnings have come in solid for most companies this year, save for Netflix (Nasdaq: NFLX). Investors and traders will certainly be keeping an eye on Netflix with Comcast looking to make a stronger Xfinity push.

Over the last six reporting periods, Comcast has topped views by an average of 4.5 percent, with an unfortunate third-quarter 2011 miss last November the only blemish for nearly two years.

Data from Bloomberg has 28 firms with a Buy rating on Comcast, seven at Hold, and one with a Sell. The Street's price target average is $34, which ranges from $32 to $36. Over the last year, Comcast has traded within a range of $19.19 to $30.88. Of note, the average price target indicates about 11 percent upside from the Street's estimate.

Analyst Comments

• Wells Fargo is looking for EPS of 43 cents and revs of $14.59 billion. The firm expects 630K Cable PSU adds and ARPU up 7.7 percent to $143.21. For NBCU, Wells recently said its top-line estimate fell by $5 million "due to lower than expected ratings at the cable networks; though our NBCU OCF estimate rises as we had been overly conservative regarding margins."
  
  
• Brean Murray Carret & Co. is modeling revs of $14.4 billion and EPS of 43 cents. The firm sees a 5 percent gain in Cable revs and EBITDA: "Results are being driven by strong pricing trends with ARPU per sub expected to rise 7% to $141.82. Lower video churn will be offset by slower HSD and voice adds for a 29% drop in new RGU to 455,000."
  
  After the first quarter, Brean sees NBCU being "margin challenged." The firm said it is lowering fiscal 2012 EBITDA by 4 percent "on lower profitability at the NBC Network and Theme Parks, offset by a modest improvement in Filmed Entertainment."
  
  
• Deutsche Bank sees revs of $14.52 billion and EPS of 39 cents. The firm sees about 19,000 of Video sub losses, "given mgmt suggested 2011’s churn improvements have been annualized, leaving just the 2H11 gross additions improvements to flow through to drive 1H12 results."
  
  The firm also noted, "We show NBCU revenue up 11% but core EBITDA flat hurt by the NBA shift, though The Voice ratings and Film being better-than-expected could provide upside."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Comcast's past performance at Streetinsider's Comcast's Income Statement.

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