Bernstein Research has upgraded its rating of Comcast stock from "perform" to "outperform" Tuesday and upgraded its target price from $20 to $26 per share on the assumption that the Federal Communications Commission and Department of Justice are close to approving the deal.
"We think it is time for investors to start thinking of Comcast as the combined Comcast/NBCU," Bernstein senior analyst Craig Moffett wrote in a report to investors Tuesday morning. Moffett said he is expecting the deal to close in early 2011, as do an increasing number of deal watchers inside and outside the FCC.
Moffett said that even with online conditions, which remain the key question mark on the deal, Comcast is primarily a distribution company and those conditions will "primarily affect the content side" which is less than 10% of its earnings. "Comcast's core cable distribution business will not be materially affected by these conditions," he said.
Comcast has lagged other cable stocks due to the regulatory limbo of the deal vetting, according to Moffett, but looked at as a combined company, should be more attractive to investors, particularly with the FCC's move away from Title II reclassification of broadband and support in the network neutrality order for usage-based pricing, which Moffett has said is huge for the cable industry.
By contrast, NBCU is likely to be worth less inside the deal that stand-alone given the expected conditions, including possibly on pricing of its content to competitors, he said.