The cable industry is struggling, leading analysts at RBC Capital to downgrade cable provider Comcast (CMCSA) - Get Report to sector perform from outperform while also lowering their price target to $42 from $45.
The firm sees limited upside for the company's broadband business on potentially decelerating growth in households and less upside from market penetration.
"While CMCSA is an industry leader, we're concerned about broader fundamentals. We think slowing household growth and less upside from market share gains could limit broadband expansion. We also think the pace of cord-cutting could accelerate due to more content available on DTC. We think these trends could limit multiple expansion in the sector," analyst Seven Cahall wrote.
The firm still expects Comcast to lose 126,000 cable subscribers in the first quarter and its estimate of high-speed data additions was trimmed to 340,000 from 402,000.
"We think these developments limit cable's opportunities for multiple expansion. On the video side we're concerned that the proliferation of DTC and vMVPD (virtual multichannel video programming distributor - i.e. Roku) services will increasingly cannibalize linear subs. We now expect CMCSA's video sub losses to accelerate by 50bps," Cahall wrote.
The stock fell .9% to $39.64 in trading Friday.
Comcast is a holding in Jim Cramer's Action Alerts PLUS charitable trust.
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