Comcast is in the core of changing situation.

 

2018.9.25
Comcast
Closed at $35.63 (-5.99%) Target to $31.00 (-12.99%)
Indices
DJ World-Media 575.66 (-0.48%)
S&P500 2,919.37 (-0.35%)
NASDAQ 7.993.25 (+0.08%)
10y US T-Note 3.1024% (+0.0396%)
Bloomberg Barclays US Corporate 2,826.57 (-0.07%)
1. Yesterday, Comcast announced takeover of Sky, UK telecommunication company, with $39bn. Finally, the takeover battle between Comcast and 21 century Fox is over. Comcast wined, But the markets are worrying about Winner’s Curse. Sky, Television Broadcasting company in UK, has being overestimated with the battle. Comcast, itself as Television Broadcasting company, has about expected P/E ratio of 14. But Sky with $39bn got much more than 30 for its expected P/E. P/E of 30 for Television Broadcasting is too much now. The biggest Television Broadcasting companies in US, Europe or Japan got P/E of between 12 and 20. And in strategic way, analysts are suggesting that the takeover of that scale would lead the company to very wrong way. What the biggest rivals of comcast are trying to achieve nowadays is new ways of beating Netflix, and expanding market shares in US markets. Comcast’s bet to Sky is perfectly against those strategies. Sky don’t have special edge against Netflix, and its main stage is Europe. Besides, if Comcast offers their shares of Hulu, streaming joint venture with Walt Disney, to Walt Disney to get the rest of the share of Sky owned by the competitor, it’s the exactly opposite way the sector is trying to do nowadays. Market participants are sending concerns to the company, and share-price ended with -6% yesterday.
2. Worry for debts has been suggested. Nowadays, some market participants are worrying about the corporate debts. The concern has been said from end of last year, and right-now could a point of realization. Market yields are rising fast, 10y T-Note touching 3.1%. The US corporate bonds, which touched the lowest at May, are starting to decline again with rising yields of US T-Notes. this would be burden for Comcast, which got debts more than $65bn. the debts of the company is about 34% of the assets. Even though Their main business Television Broadcasting is the business of generating cash, rising yields could be huge burden to eyes of the market participants. the analysts are worrying continuously about high-debt sectors like Utility, Leisure or Real-estate with rising yields. Even if the bull stock market would be last for a while, the situation is different from before Feb this year. Some companies are going to plunge, and the kings of the debts could be sacrifices in changing momentum.
3. The concerns for rising yields and wrong strategic decision would be catalysts. Comcast is in the core of the concerns in the markets. There aren’t the many participants who got the nerve to take buy Comcast in this point. My target price for the company is $31.
Mr. Banker, http://markety.tistory.com

Comcast (Sep, 25).pdf