Comcast (CMCSA) stock rose 2.4% in after-hours trading yesterday following news of a $7 billion spinoff of NBCUniversal cable channels. The media conglomerate could announce the plan for the cable TV networks’ separation today. This move is meant to streamline operations and better position the individual houses for future growth. The news was first reported by the Wall Street Journal, citing people familiar with the matter.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Here’s How the Spinoff Is Expected to Shape Up
NBCUniversal includes several renowned news and entertainment channels such as MSNBC, CNBC, E!, Syfy, and Oxygen, as well as its theme parks. According to the Wall Street Journal, these combined assets generated revenues of $7 billion in the twelve months ending September 30, 2024. Meanwhile, Comcast will retain ownership of Bravo, Peacock streaming, and NBC Broadcast networks.
The report added that the spinoff could take about a year to complete and will be tax-free for shareholders. Mark Lazarus, current chairman of NBCUniversal Media Group, would be named as the CEO of the new company. Comcast also made several other leadership changes at NBCUniversal, effective immediately, in light of the expected spinoff, the report added.
Comcast completed its full acquisition of NBCUniversal in 2013, after it took an initial stake of 51% in 2011. Back then, legacy TV channels were flourishing with rising demand for cable networks. A decade later and with the post-COVID scenario in play, streaming networks have taken over legacy TV channels. This has compelled several media houses to reconsider their growth expectations for TV channel networks and shift their focus to online streaming. Comcast has also been mulling over the spinoff of NBCUniversal since last month.
Insights From TipRanks Bulls Say, Bears Say Tool
According to the TipRanks Bulls Say, Bears Say tool, some analysts are excited about the solid Q3 performance, the possibility of a spinoff of the cable networks and DTC business, and Comcast’s ability to deliver wireless services at cheaper rates to a vast number of households.
On the other hand, bearish analysts are concerned about the intense competition, the deteriorating performance of Parks, and the low scope of improvement in the enterprise value (EV) of the combined entity.
Is CMCSA a Good Stock to Buy?
Despite Comcast’s better-than-expected Q3 FY24 print, analysts remain divided on CMCSA’s stock trajectory. On TipRanks, CMCSA stock has a Moderate Buy consensus rating based on 12 Buys and seven Hold ratings. The average Comcast price target of $49.47 implies 16.9% upside potential from current levels. CMCSA shares have gained 9.6% in the past six months.
