Comcast, Charter rise as Truist upgrades pair, citing understood risks, valuations
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Comcast (NASDAQ:CMCSA) and Charter Communications (NASDAQ:CHTR) shares both rose in premarket trading on Thursday as investment firm Truist upgraded the cable companies, citing their negative share-price performance in 2022 and several "well understood" risks. 
Analyst Greg P. Miller raised his rating on Comcast (CMCSA) and Charter Communications (CHTR) to buy from hold and gave them respective price targets of $50 and $550, noting that 2022 saw poor performance from their broadband segments, but efforts to stem market share losses look to be working. 
"...[W]e believe efforts to stem the erosion are proving successful and should once again cause the stocks to trade at traditional premiums to telecom stocks," Miller wrote in a note to clients.
Comcast (CMCSA) and Charter Communications (CHTR) fell 31.1%
and 47.6% in 2022, respectively, compared to a 19.4% drop for the S&P 500.
The broadband segments of both Comcast (CMCSA) and Charter Communications (CHTR) have come under pressure from Verizon (VZ) and AT&T (T) with their fiber and fixed wireless businesses. However, Miller added that Verizon's (VZ) rollout of its fixed wireless access program is likely to "scale slower than originally expected" as the company works on preserving cash.
Delving deeper, the analyst noted that the risks from fixed wireless and fiber are now "well understood" by investors, unlike in 2022, when investors believed the only issue was the "pull-forward" from the COVID-19 pandemic. As such, it's believed that downside is "limited" from these levels and there is likely to be gains for both company's high-speed internet businesses in 2023.
Miller also noted that the incremental spending is likely to be less than expected, with Charter (CHTR) expecting the network upgrade cost to be $5.5B and roughly $100 per home, as said on its investor day. While there is some skepticism about this, Miller added that both companies have collectively invested roughly $138B into the cable network over the past decade, where as telecoms - save for Verizon (VZ) - have only just started their fiber initiatives.
The analyst also noted that Comcast (CMCSA) and Charter (CHTR) are likely to keep buying back stock, with expectations that the pair will buy back $8B and $7.2B in stock in 2023 and $8B each in 2024.
Last month, Wells Fargo upgraded Comcast (CMCSA), citing a "less negative" view on its cable business even as the outlook for its NBCUniversal division continues to worsen.