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File photo: Comcast Chairman and CEO Brian Roberts speaks during a news conference in Washington, D.C.
The firm raised its rating to outperform from market perform for Comcast shares, predicting investor sentiment for the company will improve over the next year.
On Thursday Comcast said it would not pursue its bid to buy parts of Twenty-First Century Fox, choosing to focus on its offer for Britain’s Sky.
“We are upgrading shares of Comcast … following its announcement that it will not make a superior offer for the FOXA carve-out assets,” analyst Frank Louthan IV said in a note to clients Thursday. “Our thesis on the operating business remained unchanged, as Comcast is the best positioned large-cap cable/telco name with predictable growth, cash returns to shareholders, low leverage, recurring revenue, and FCF growth.”
Louthan commended the company’s price discipline in its bidding war with Disney over Fox’s assets.
Comcast shares rose 3 percent Thursday after the announcement. Its stock is down 15 percent this year through Wednesday versus the S&P 500’s 5 percent gain.
The analyst initiated a new $40 price target for Comcast shares, representing 17.5 percent upside to Wednesday’s close.
“We believe Comcast is the best operator in the space with an attractive set of assets, and that this will be better reflected in the share price over the next 12 months,” he said.
Disclosure: Comcast owns CNBC parent NBCUniversal.