Comcast, AT&T Especially Vulnerable to Coronavirus Fallout, Says Baird

Comcast and A&T were downgraded in a note that also upgraded Netflix.
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Comcast  (CMCSA) - Get Report and AT&T  (T) - Get Report were hit with downgrades at Baird Monday as the firm sees economic pressures, as well as the lack of live sports programming, weighing on the media sector as the coronavirus pandemic spreads. 

Comcast and AT&T were downgraded to neutral from buy despite the firm's bullishness on the pair just weeks ago, as the coronavirus pandemic continues to pressure the global economy. 

"Just a few weeks ago we had viewed T and CMCSA as relatively defensive, and while T still has a strong dividend backstop, both are facing significant headwinds, particularly CMCSA with its Sky (Europe video) and NBCU exposures," analyst William Power wrote. 

Additionally, the loss of live sports will hurt the two broadcast networks, even if they are temporary, and could re-accelerate video cord cutting trends.

Comcast faces near-term pressures across its NBCU portfolio, including broadcast, theme parks and film that could take longer than expected to recover, according to Power. 

"On Friday, AT&T suspended its buyback as it evaluates COVID-19 impacts. Though surging network usage creates opportunities in enterprise and consumer, we expect that to be more than offset by the loss of live sports, the closing of wireless retail stores, the potential of accelerated linear TV subscriber losses and long-term economic uncertainties," Power wrote. 

Meanwhile, at the other end of the spectrum, Power wrote on Monday that Netflix  (NFLX) - Get Report is poised to climb as people are forced to stay home amid a government shutdown of live entertainment alternatives. He upgraded Netflix shares to outperform.

AT&T shares were falling 7.4% to $26.36 Monday afternoon while Comcast declined 1.7%.