A lot of change is taking place at Comcast Corp. (NASDAQ: CMCSA). With the upcoming spin-off of MSNBC, CBNC and other cable media outlets, the new VERSANT stock will be independently operated outside of the Comcast umbrella. There are still outstanding questions that should become more known upon the spin-off taking effect.
One undeniable issue that has plagued Comcast is that its stock’s performance has been dismal at a time that the stock market has been hitting all-time highs. Oggonomics wants to know if strategic investors will find more opportunity ahead of the spin-off or whether the ongoing risks will continue to keep those strategic investors away.
Even creating an outlook for Comcast is not a simple task ahead of this key event. Equity investors are often said to take a view months out over the horizon rather than only being focused on the news of the day. That said, investors seem to be taking a “show me” (or at least a “wait and see”) attitude based on uncertainties and based on how Comcast’s stock has fallen despite such a strong stock market. Some investors are likely to wonder — how bad would the stock have performed had the April stock market panic not have reversed back into “raging bull” mode?
THE CRITICAL VIEW REMAINS
Comcast’s remaining portfolio after the spin-off will include the NBCUniversal portfolio, as well as its Peacock streaming service, Universal Studios, theme parks and Bravo. NBC’s assets are soon to no longer to be available for MSNBC and the new VERSANT structure.
Oggonomics has been vocal about how Comcast’s spin-off of VERSANT is looking, going as far as pointing out that MSNBC’s best option may to simply be closed. That said, the new MS NOW (the new name for MSNBC) could perhaps be left top operate on its own as a standalone entity. This would be one alternative rather than being under the same umbrella with CNBC, USA Network, Oxygen, E!, SYFY, the Golf Channel (as well as NASCAR), and digital assets like Fandango, Rotten Tomatoes, SportsEngine and so on.
WALL STREET STAYS NEGATIVE ON COMCAST
Oggonomics has tracked multiple analyst downgrades for Comcast’s stock after its earnings report. Perhaps the good news is that Comcast’s stock did not fall even further the earnings, but its year-to-date stock performance still was -27% while the S&P 500 was up 16% YTD. Comcast’s stock is also -35% from a year ago (around the announced VERSANT spin-off), and here is its live performance over a longer look-back period (according to Finviz):
- 3-Year performance is -13%
- 5-Year performance is -37%
- 10-Year performance is -11%
Three formal analyst downgrades were tracked on Friday, with more than a half-dozen additional analyst price target cuts having been seen. Please note that all analyst ratings and price targets noted in this report are from each firm named. Oggonomics does not have its own price target or rating on Comcast shares.
Goldman Sachs downgraded Comcast to Neutral from Buy and cut its price target to $30 from $39, outlining its broadband challenges facing stiff competition. The firm specified that it underappreciated the magnitude of a broadband pricing reset from Comcast. The firm’s continued “Buy” rating is due to an attractive sum-of-the-parts valuation, even calling it a cheap stock. The downside is that Goldman Sachs also noted Comcast lacks a near-term positive catalyst within its core business.
KeyBanc Capital Markets downgraded Comcast to Sector Weight from Overweight without a formal price target. While broadband and mobile net additions were better than expected, KeyBanc also admitted that it underappreciated investments that were needed. while Comcast’s shareholder returns are moving lower. The firm also cited a lack of catalysts with competitive pressures only rising.
Seaport Global downgraded Comcast to Neutral from Buy, also without a formal price target. The firm is cautious about Comcast’s negative broadband metric trends and their expected high costs of investing. Despite seeing value here, Seaport sees no hurry to buy the pullback even though Comcast’s shares are down handily from their old highs.
- Benchmark (Buy) price target cut to $46 from $48
- Bernstein (Market Perform) price target cut to $34 from $36
- BofA Securities (Neutral) price target cut to $31 from $36
- Evercore ISI Group (Outperform) price target cut to $35 from $40
- Morgan Stanley (Equal Weight) price target cut to $32 from $35
- Scotiabank (Sector Perform) price target cut to $41.50 from $45.50
- TD Cowen (Buy) price target cut to $40 from $46
WHEN WILL VERSANT TRADE ON ITS OWN?
When is Versant’s own independent stock set to trade? Oggonomics has been under the impression that Comcast’s spin-off of Versant will be completed in November/2025. Is that still the likely case considering the magnitude of change that will be needed, even after a year of planning this spin-off? At the present time that answer appears to be “yes.”
Comcast’s negative stock performance has been despite its earnings release detailing that it has reduced its shares outstanding by 5% versus the prior year’s equivalent period. Should Comcast have considering waiting to buy the stock back?
Wall Street’s view of Comcast is also low while the stock market seems to hit all-time highs almost every week. One additional problem is that MSNBC (and presumably CNBC) is losing editorial assets of NBC anchors and reporters earlier than expected. And the largest problem for Versant, particularly with MSNBC’s ratings, is that Versant’s revenue has been declining in recent years.
According to the 2024 spin-off announcement, the then “SpinCo” was said to have the same dual-class share structure as Comcast and “will be better positioned to achieve long-term growth and create value for stakeholders.”
CREDIT RATINGS FOR VERSANT SAY…
The VERSANT spin-off was said to be a well-capitalized company with a strong balance sheet. That said, it looks like the formal ratings will not be considered “investment grade” for bond investors. The first release by Comcast noted that “SpinCo” will have a well capitalized balance sheet with strong credit metrics, although in fairness that announcement never promised “investment grade” ratings.
S&P assigned a ‘BB’ issuer credit rating to Versant, with a ‘Stable’ outlook. It issued ratings for the standalone Versant Media Group on October 17, noting that Versant plans to issue $2.75 billion of new senior secured debt in order to fund a one-time $2.25 billion cash distribution to Comcast — and to add another $500 million to its balance sheet and to help transition into its own publicly traded company. Elsewhere:
- Fitch assigned Versant’s new senior secured notes a ‘BB+’ rating, noting declining secular industry trends despite loyalty from cable media subscribers once they are fans.
- Moody’s Ratings assigned a ‘Ba2’ rating to Versant’s new secured notes, noting a ‘Stable’ outlook.
IN THE END…
Comcast may finally be more attractive to shareholders once it has completely severed ties with and completed this spin-off of VERSANT. The company has even announced that CEO Brian Roberts will be joined by Michael J. Cavanagh, who joined as CFO in 2015 and is the current President, in a co-CEO role.
Comcast is not transferring its NBC assets or access, despite the initial reporting saying that the new company would enter into a transition services agreement with NBCUniversal to allow it (SpinCo) to operate seamlessly from day one. This may actually help to further separate the public views of Comcast’s NBC and other assets away from the future iteration of MSNBC and its other properties that will make up VERSANT.
The good news for new investors taking a look at Comcast is that the stock performance has been so bad that value investors may begin to circle. There is currently a 4.8% dividend that may attract investors as it out-yields the 10-year and 30-year Treasury yields. It is also valued at just 6.5-times current year earnings, but it also had $93.2 billion in total long-term debt at the end of September/2025. Comcast would also seem to be able to continue buying back its common stock (or pay down debt) with its one-time payment from VERSANT.
Now investors just have to get the spin-off date and see how Comcast trades into and after that key event. And it seems some new investors may not want the new VERSANT spin-off shares at all, which is one more risk that a “wait and see” attitude may prevail.
Comcast’s stock price closed up 1.9% at $27.93 on Friday. Earlier in the day it was down 7-cents at $27.25 in late morning trading but up 10-cents at $27.40 in early afternoon trading. Its 52-week trading range is $25.75 to $45.22. Its market cap was right at $100.5 billion at that time.
