It's a long way from affection, but Wall Street seems to have dropped its outright aversion to cable companies lately.
No. 1 player
is up 10% in the past month as investors anticipate a report of solid numbers and a return to subscriber growth when the company releases its first-quarter results before the bell Thursday.
For the last two years, Comcast stock has gone nowhere as growth slowed. The company picked up detractors last year as subscriber rolls started shrinking, as users defected to cheaper offers from satellite TV providers like
Cable worries were compounded as the growth in broadband lines opened up potentially disruptive new video outlets. Along with the real threat of satellite, some observers predicted the rise of video over the Internet, which could further threaten cable's TV distribution franchise.
But growth is back, and fears of a Net-video revolution may be a bit premature.
Now that the Philly cable giant has started pushing its voice-over-Internet phone service, Comcast has been able to employ the coveted service bundle -- phone, Net and video -- to draw customers back from the clutches of its satellite TV rivals.
"The triple plays are winning back a lot of basic subscribers," says a New York hedge fund manager who has become a fan of Comcast. "The implication is clearly negative for satellite."
UBS analyst Aryeh Bourkoff has been optimistic about the turnaround prospects in the cable sector. Bourkoff raised his first-quarter net subscriber addition estimates for Comcast to 45,000, from 5,000 previously, based largely on the strength of the triple-play offering.
Bourkoff says in a recent report that Comcast's share price doesn't reflect the company's revived growth trend.
"We can not recall another time in the company's recent history at which there has been such a mismatch in prospects for fundamental momentum versus valuation levels," Bourkoff says in his report.
Analysts expect Comcast to post adjusted profit of 14 cents a share on sales of $5.8 billion in the first quarter, according to Reuters Research.
One possible drag on the growth theme that may emerge Thursday is rising costs, say observers.
Comcast will likely have to spend more on equipment and advertising as it rolls out more VoIP service.
"The higher capital spending is good for suppliers like
," says the hedge fund manager, "but not so hot for Comcast."