Comcast, Altice raised at Citi on potential plan to stabilize or improve shareholder value
Justin Sullivan

Comcast (NASDAQ:CMCSA) and Altice USA (NYSE:ATUS) received upgrades from Citi on Thursday as the investment firm said the cable industry is going through a tough time, but there is an "increasing likelihood" the firms will respond with a plan to stabilize or improve shareholder value.
Analyst Michael Rollins upgraded Comcast (CMCSA) and Altice USA (ATUS) to buy from neutral, but lowered the price targets to $36 and $8 from $42 and $12, respectively. Rollins said the potential plans could include growing EBITDA even without "meaningful revenue growth," especially from their broadband and business revenues. 
The new plan could also include accelerated technology upgrades and efficiency initiatives, as well as monetizing under-appreciated assets and the potential to "opportunistically invest and repatriate cash to shareholders."
Rollins conceded that the upcoming third-quarter results for the cable industry is likely to be tough, as broadband growth looks tepid and valuations have reached the same as the telecom industry for the first time since the financial crisis. 
However with estimates likely to come down, the analyst noted that this could result in being a "meaningful step forward" towards the evenutal stabilization of cable revenue and refocusing investors on the companies improving profitablity, including a rising mix of broadband and business revenue. 
The analyst also noted that the "elevated" free cash flow yields of the cable industry are likely to come down as EBITDA grows and stabilization opportunities appear. It's also possible that Altice USA (ATUS) could sell some or all of its assets, a move that could "help to catalyze better valuations for Altice USA and the category."
On Wednesday, Comcast (CMCSA) announced that current CFO Mike Cavanagh has been also named President.
Analysts are universally cautious on Comcast (CMCSA). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. In addition, Seeking Alpha's quant system, which consistently beats the market, rates CMCSA a HOLD.