Bernstein believes meeting quarter's estimates will be "sufficient for outperformance" of Comcast shares
Comcast (CMCSA; CMCSK) is expected to report second quarter results before market open on Thursday, July 29, with a conference call scheduled for 8:30 am ET. What to watch for:
1. STOCK OUTPERFORMANCE: Earlier this month, Bernstein analyst Peter Supino upgraded Comcast to Outperform from Market Perform with a price target of $52, up from $48. The analyst’s updated second quarter and 2020 estimates are in-line with consensus, and he believes meeting estimates is "sufficient for outperformance" of Comcast shares. In an open letter to Chairman and CEO Brian Roberts, Supino said that he views the stock as "demonstrably undervalued" and with the "pendulum of investor confidence now underappreciating Comcast's strategic intelligence and commitment to long-term value creation."
However, the analyst argued that for Comcast to be "a great stock, not just a good stock," the company must re-think the strategy and structure of its NBCU and Sky segments. Comcast's current strategy in media "is one of incrementalism, and that now is a time for boldness," he contended, adding that he Supino supports a spin-out of NBC Universal/Sky. He sees a path to over $4 of adjusted earnings per share and a $60-plus stock in three years.
2. PEACOCK LAUNCH: Peacock, NBCUniversal's new streaming service, officially launched on July 15. However, CNET’s Joan Solsman reported that "two of the most popular devices to stream to televisions are missing: Roku (ROKU) and Amazon's (AMZN) Fire TV." Roku said it looks to bring Peacock to its "large customer base of avid streamer," but could not agree to reasonable and standard industry terms," the author noted. "Peacock has support for other streaming-TV devices, like Apple (AAPL)TV, Google's (GOOG) Chromecast, Microsoft's (MSFT) Xbox One and now Sony's (SNE) PlayStation 4," the publication added.
3. HORROR FILM SLATE DELAY: Comcast's Universal Pictures is delaying the release of a number of horror films that were set to come out later this year as the COVID-19 pandemic worsens, CNBC's Sarah Whitten reported on July 8. The company said that Jordan Peele's "Candyman" will be pushed from its September 25 release date to October 16, while Blumhouse's "The Forever Purge," which was originally expected to come out this month, has moved to July 9, 2021. Universal also delayed "Halloween Kills" to October 15, 2021, from October 16, 2020, the author noted.
4. UNIVERSAL PARKS: Due to concerns over COVID-19, Universal Studios Japan's planned Super Nintendo World (NTDOY) will not open this summer, Kotaku's Brian Ashcraft reported. While the state of emergency has been lifted in Japan and the park re-opened earlier this month, visitors have been restricted to annual pass holders and Kansai residents with passes, Ashcraft noted. Super Nintendo World's planned July debut has been postponed because the park is attempting to maximize social distancing and avoid congestion in the park in the midst of the viral outbreak, Ashcraft said, citing NHK.
Meanwhile, Universal Orlando Resort has reopened early last month after closing in March due to the coronavirus pandemic.
5. SMILEDIRECTCLUB LAWSUIT: On May 18, SmileDirectClub (SDC) announced that it has filed a lawsuit seeking approximately $2.8B from NBC Universal Media and reporter Vicky Nguyen for "knowingly and intentionally making factually inaccurate, misleading and defamatory claims about the company and its platform on an NBC Nightly News with Lester Holt report." "NBC's February 13, 2020 'Nightly News' report contained more than 40 false and misleading statements about SmileDirectClub and the treatment patients receive from the hundreds of board-certified doctors who use the company's platform to treat patients,” the company said in the lawsuit filed at the state courthouse in Nashville.
SmileDirectClub added that, "NBC misled its viewers and readers about the safety of the treatment that patients receive when using SDC's platform, the involvement of licensed dentists and orthodontists in the treatment of patients when using SDC's platform, and the benefits that patients receive when they are treated using SDC's platform. Incredibly, nearly everything that NBC stated and implied about SDC in its broadcast and online report was factually inaccurate."
In the wake of NBC's report, and as a direct result of it, SDC's market cap plummeted by $950 million, SmileDirectClub noted. As provided for by law, SmileDirectClub is seeking to recover treble damages pursuant to Tennessee's Consumer Protection Act.