Comcast Corp. (CMCSA) is seeing great returns from its focus on broadband connectivity, but weakness in the company's theme park segment could hurt third- quarter earnings before interest, taxes, depreciation and amortization, according to Nomura analyst Jeffrey Kvaal.
Kvaal said he believes that strength in the company's other segments still make Comcast viable ahead of Comcast's third-quarter earnings release on Oct. 25, but weakness in its theme park segment in Japan will hurt the bottom line.
"Universal Japan was impacted by significant weather challenges in 3Q such that we are reducing both our FY18 and FY19 EBITDA forecasts by ~$150mn each year to reflect conservatism in the Parks segment," Kvaal wrote.
Despite the segment headwind, Nomura expects the company's broadband business to add 315,000 subscribers, which is well ahead of Wall Street's 292,000 average expectations.
Another bright spot for the company is that losses to its cable subscription business are expected to stabilize.
"We expect Comcast to continue to stress the priority of connectivity, or HSD broadband, over video on its 3Q earnings call next Thursday morning, October 25th. Comcast remains well on track to add over 1mn net broadband adds driven by enterprise growth," Kvaal said.
Overall, Nomura has a neutral rating and a $40 price target, which is a nearly 10% upside over the stock's closing price on Wednesday.
Comcast shares fell 0.6% on Thursday.