NEW YORK ( TheStreet) -- Comcast (CMCSA - Get Report), which on Friday became the country's second-largest broadband provider behind AT&T (T - Get Report), is feeling the impact of cord-cutting, the increasing tendency of people to get rid of their cable-TV package.
But amid reporting its arguably mixed second-quarter earnings on Thursday, the company headed by CEO Brian Roberts demonstrated that it's become as secure an investment as any staple
Comcast's second-quarter earnings of 84 cents a share were 12% above the same period a year earlier, and in-line with analyst estimates. Revenue for the quarter totaled $18.7 billion, an 11% gain from a year ago, and above the Street's forecast of $18.1 billion. Most important for those focused on Comcast's core pay-TV and Internet business, it included a 6.3% increase in cable communications revenue to $11.7 billion.
"For a company of this size to continue to deliver these type of results with a strong outlook is an outstanding achievement," said Pivotal Research analyst Jeffrey Wlodarczak in a July 23 note. The firm, which said Comcast's core cable business makes it an "attractive opportunity," raised its price target from $72 to $80.
Comcast, which reported 31,000 more customer relationships to 27.3 million year-over-year, has been making a concerted effort to invest in customer service with 5,550 new hires as well as in cloud-based customer platforms for employees to view customer accounts, investments that Wells Fargo analysts say will bode well in the long-term.
"We get the sense that CMCSA is doing a little bit of "clean-up" while still investing for long-term growth," said Wells Fargo analyst Marci Ryvicker in a July 23 note. Wells Fargo has an outperform rating on Comcast.
Comcast's shares have gained 7.2% this year and 13% in the past year.
It is certain to face more competition with AT&T, which on Friday received final approval from the Federal Communications Commission to acquire DirecTV (DTV - Get Report) in a deal valued at roughly $48 billion. AT&T's acquisition of DirecTV is likely to put greater more pressure on Dish Network (DISH - Get Report), its chief rival for satellite-TV service. As a condition for the merger, AT&T agreed to build high-speed, fiber-optic broadband Internet to the locations of DirecTV's 12.5 million customers.
Revenue from Universal theme parks also skyrocketed in Comcast's second quarter after new attractions, locations and hotel room capacity that, along with the strength in film, should be "more than enough to offset flattening in cable nets for the remainder of the year," said UBS media analyst John Hodulik in a July 23 note. UBS increased its price target to $70 from $66 while holding a Buy rating.
Comcast's revenue in film and theme parks surpassed J.P.Morgan's most optimistic estimates as the firm, which holds an overweight rating and a price target increased to $73 from $70, expects third-quarter gains on hit titles like Minions and the new Fast and Furious attraction in Hollywood.
"As the new Harry Potter Escape from Gringotts attraction laps its one-year anniversary this month, we expect the year-over-year theme parks revenue growth rate to slow down but still post double-digit growth in 3Q," said Philip Cusick, J.P.Morgan analyst in a July 23 note. "We estimate $1.7 billion of revenue for the film segment and $880 million for theme parks in 3Q, up 43.6% and 12.0% year-over-year, respectively."
However, Comcast's surprise second-quarter film success, namely the 92.7% revenue increase following box office hits like Furious 7 and Jurassic World, which has drawn $1.52 billion so far this summer, could be a less reliable bellwether of future performance amid an unpredictable film industry.
In another potential upside for investors, Comcast's NBCUniversal is reportedly in early-stage talks regarding media acquisition options like Buzzfeed, Business Insider or Vice to enhance its younger customer base, according to a Wall Street Journal report. It's also mulling increasing its 14% stake in Vox Media the report said, citing "people familiar with the matter."
But Comcast's lunge toward new digital media companies to shore up a stronger millennial outreach it against competition like Walt Disney (DIS - Get Report) and Twenty-First Century Fox (FOX), (FOXA), both of which are also hunting for similar investments.