Investing.com -- Bank of America (NYSE:BAC) downgraded Comcast Corp (NASDAQ:CMCSA) shares on Friday, while also reducing the price objective (PO) from $50 to $38.
The downgrade reflects a competitive environment, which includes increasing fixed wireless access (FWA) deployments and fiber builds that are contributing to broadband market share losses for Comcast.
Analysts at BofA also cited the maturation of the US broadband market, which has reached approximately 90% penetration, indicating that future industry growth is likely to be limited.
The intensified competition is expected to impact broadband pricing power, a concern underscored by Comcast's revised average revenue per unit (ARPU) growth guidance. The company's shift towards converged offerings, which typically involve discounts, is seen as a response to the competitive pressures.
Moreover, the bank’s analysts noted the lack of significant catalysts that could drive Comcast's shares higher in the near term. Also, the investment required for Comcast's streaming service, Peacock, is projected to continue to be a drag on financial results, with an anticipated larger EBITDA loss in 2026 due to NBA programming costs.
BofA's outlook for Comcast's broadband growth has become more uncertain. Despite growing data consumption, which could benefit Comcast, fixed wireless operators have been managing traffic demands effectively, potentially delaying Comcast's ability to regain subscribers.
In addition, fiber operators are expanding their reach with a product that could be more competitive than Comcast's coaxial offerings in the long term.
As a result of these factors, BofA has revised its estimates for Comcast, now forecasting a residential broadband net loss of 525,000 subscribers in 2025, compared to the previous estimate of a 225,000 loss.
The 2026 estimate has also been adjusted to a 350,000 loss from a 60,000 loss previously projected. The analysts estimate a 0.7% decline in 2025 revenue for Comcast's Cable Communications segment and a 0.7% decrease in EBITDA, with a 40.5% margin.
For the Cable Networks and Entertainment segment, a 0.9% revenue decline is expected, with a 2.8% year-over-year EBITDA decline.
BofA projects a 0.8% decline in consolidated EBITDA for 2025, with free cash flow (FCF) of $16.3 billion, an increase from the prior estimate of $14.2 billion, attributed to a one-time tax benefit.
“For Comcast, 2025 will be a reset year as the company looks to improve it broadband results by leaning into mobile and converged offerings,” analysts led by Jessica Reif Ehrlich said in a note. “However, 1H25 C&E results will be dragged down by pre-opening Epic costs and softer Studio results.”
As for the second half of the year, BofA flagged uncertainties in the broadband environment, and negative impacts from the NBA contract and reduced Media growth.
