Broadband and pay-TV bellwether Comcast (CMCSA) - Get Report will give investors an important read on the impact of tax cuts, cord cutting, the Super Bowl and the Winter Olympics in its fourth-quarter earnings report before the market opens on Wednesday.
Wall Street expects Comcast to earn 47 cents per share on $21.8 billion in sales, according to FactSet. Ahead of the report, Comcast closed down 1% at $42.44 on Tuesday. Year to date, Comcast shares are up close to 6%.
Verizon (VZ) - Get Report whetted Wall Street's appetite for outsized cash windfalls from the new tax plan on Tuesday, when Chairman and CEO Lowell McAdam told investors that the carrier expects a $3.5 billion to $4 billion gain in operating cash flow this year because of the new tax bill.
Among the telecoms and cable companies, Jefferies analyst John Janedis estimated that Comcast and Verizon stand to gain the most from the Tax Cuts and Jobs Act. In January, he projected that Comcast could reap a $2.5 billion cash benefit in 2018 from the legislation, and nearly $3.3 billion next year.
Comcast has gotten upgrades because of the expectations of significant tax benefits. Barclays analyst Kannan Venkateshwar upped his price target for Comcast from $41 to $43 and UBS analyst John Hodulik raised his target from $45 to $49, both citing the impact of the Tax Cuts and Jobs Act.
With Netflix (NFLX) - Get Report announcing its highest-ever quarterly global gain in net customer additions on Monday, Comcast's video subscriber numbers may shed light on the prevalence of cord cutting. UBS expects gains of 312,000 broadband subscribers for Comcast to offset a loss of 52,000 video subscribers.
Comcast's NBC division also has some major sporting events on its calendar, and Comcast could provide guidance on how well they will perform.
NBC will carry Super Bowl LII between the New England Patriots and the Philadelphia Eagles in Minneapolis on February 4. Fox (FOXA) - Get Report generated $500 million in gross revenues in last year's game between the New England Patriots and Atlanta Falcons.
NBC will also broadcast the 2018 Winter Olympics in PyeongChang, South Korea starting in early February. The 2014 Winter Olympics in Sochi, Russia, generated $1.1 billion of revenue and $105 million of operating cash flow. And Comcast's Telemudo will broadcast the FIFA World Cup later in the year.
Investors may get a read, too, on how Comcast's $3.8 billion purchase of DreamWorks Animation SKG Inc. is working out. Comcast closed the purchase during the third quarter of 2016. Wednesday's report will be the first one with a full year-over-year comparison of Dreamwork's performance under Comcast's ownership.
Also look for details about Comcast's fledgling mobile service, which resells Verizon's wireless service under the Xfinity Mobile brand. The service launched in May and had 250,000 subscribers by the end of the third quarter. Comcast could hit 600,000 this year, Michael Morris Guggenheim Securities, LLC estimated in an earnings preview.
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