Comcast (CMCSA) and Benefit of NBCU Deal

Comcast (NASDAQ:CMCSA) has released their projections of how the deal with NBC-Universal will play out for them, and some analysts have chimed in with their own outlook.

Goldman Sachs analyst Jason Armstrong reinstated coverage of Comcast (CMCSA) shares with a Buy rating, offering estimates for how the combined business with NBC-Universal could lead to surge in free cash flow.

Armstrong writes the stock is worth $33 on a discounted cash flow basis, or $29 on a sum-of-the-parts basis, using a multiple of 6 times for the cable unit’s profit and 7 times for the NBCU joint venture.

While Comcast’s official projections of the economics of the new combined business are not expected until April, Armstrong today offers a preliminary calculation: revenue may grow 4% from this year through 2013, Ebitda may rise 6.5%, and free cash flow may rise 15% in that time, to $2.94 per share in 2013. Cash flow will be helped by a “significant increase in share repurchase activity over the next few years,” he writes.

In fact, Armstrong writes, following in the foot-steps of peers that have been doing a lot of buybacks, such as DirecTV (DTV), Time-Warner Cable (TWC), and Cablevision (CVC), Comcast, “has the potential to become the next big capital allocation story” in the industry.




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