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Value's at Cox, Not Comcast, Analyst Says

Comcast has become too expensive relative to its peers, Legg Mason believes.


(CMCSA) - Get Comcast Corporation Class A Report

was downgraded by Legg Mason Monday because the firm said the company's shares are too expensive relative to its peers, most notably

Cox Communications



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Analyst Daniel Zito cut the cable company's investment rating to hold from buy, saying the shares have appreciated 18% since the beginning of April. In contrast, Cox's shares have risen 7%. For the year to date, Comcast shares are up 43% vs. Cox's 17% gain.

"While we continue to view Comcast as the best-positioned operator in the cable universe both near term and long term, the shares have exceeded our $33 price target and we find the case for putting new money to work at these levels difficult," said Zito.

Zito believes investors are expecting Comcast to raise its 2003 cable earnings before interest, taxes and deductions guidance of $6.2 billion to $6.3 billion with the second-quarter's earnings. Most of the upside potential is already built into the current valuation, he said.

"We believe lack of an upward revision would likely be considered a disappointment by the market." Investor outlooks for 2003 EBITDA are trending toward $6.4 billion already.

Zito sees a total 22% rise in cable EBITDA in 2003-05. He believes the company will meet or exceed his 2003-05 cable EBITDA estimates of $6.3 billion, $7.4 billion and $8.1 billion, respectively.

Shares of Comcast were rising 2.2% in recent trading at $34.38, and shares of Cox were up 2.7% at $34.12.