Comcast Surges on NBCU Merger Approval

(Comcast-NBC Universal article updated with stock information and additional analyst commentary.)

NEW YORK ( TheStreet) -- Comcast ( CMCSA) shares spiked to a 52-week high this morning after the company received regulatory clearance to move ahead with its joint venture with NBC Universal.

The stock surged to a year-high of $23.68 in early morning trading and closed 1.4% ahead at $23.10.

More than 34.5 million Comcast shares traded hands today, compared with the stock's 3-month average daily volume of about 14 million shares.

Yesterday the Federal Communications Commission and the U.S. Department of Justice approved Comcast's plans to take control of NBCU from its parent company, General Electric ( GE). The deal, which was first announced over a year ago, is now expected to close later this month.

The FCC approved the merger in a 4 to 1 vote. As expected, a number of regulatory conditions were assigned to the venture in order to ensure fairness to Comcast's competitors and customers. However, most analysts don't expect the conditions to completely hinder the company's strength following the venture.

Wells Fargo analyst Marci Ryvicker reiterated her buy rating on Comcast and raised her expected valuation range for the stock to between $27 and $29, from a range of $25 to $27 after the deal was approved. She predicts the company will benefit from enhanced capital returns related to the joint venture.

The FCC is requiring a number of concessions from Comcast as part of the merger, however as Ryvicker pointed out, there is no "sweeping program access rules applied to online video content."

"It appears uncomfortably difficult for an online video distributor to gain access to Comcast-NBCU online video content without going through major hoops," she said in her Jan. 19 research note.

In addition, NBCU will maintain its economic interest in Hulu but will be forced to give up its voting rights.

Collins Stewart analysts upgraded Comcast to a buy rating from a hold today and have a $32 price target on the stock while analyst Bryan Kraft with Evercore Partners reiterated his buy rating on the stock with a $28 price target.

Analyst Matthew Harrigan with Wunderlich Securities also reiterated his buy rating on the stock this morning and specified a target price of $28.50.

Harrigan views any fallout related to the deal's conditions as "substantially less than the gain in value for NBC Universal since the deal was announced," he said in his Jan. 19 note.

Under net neutrality rules, Comcast will be prohibited from manipulating speed for third party content providers.

" Comcast only has to afford equal treatment under any arrangement that includes usage caps or tiers, preserving flexibility," Harrigan said. "This preserves the viability of outside competitors such as Netflix ( NFLX) while affording reasonable latitude in traffic management."

Comcast is scheduled to release its fourth-quarter earnings report on Feb. 16 before the market opens. Analysts polled by Thomson Reuters expect earnings to come in at 32 cents a share, compared with earnings of 27 cents a share in the same quarter in 2009.

Ryvicker does not expect Comcast to reveal a significant amount of information on NBCU's operations or on possible capital returns related to the merger.

--Written by Theresa McCabe in Boston.

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