X1 momentum could result in Comcast adding 25K+ video subs in Q4, analyst says

Could Comcast (NASDAQ: CMCSA), which saw just reported its lowest third-quarter video subscriber losses in nine years, actually grow its pay-TV base in the fourth quarter?

That's the prediction of Evercore analyst Vijay Jayant, who said the MSO's net video additions should exceed 25,000 in the fourth quarter.

"We are revising our Comcast estimates to reflect effective execution at Comcast Cable -- in particular, the benefits from stepping up the X1 rollouts to its new and current subscriber base and from the 90 percent increase in new customer relationship additions in the third quarter," Jayant said in a note to investors.

In reporting its third quarter, Comcast said it increased the deployment rate of its X1 cloud-based video service to 40,000 boxes a day. The company said it now covers 25 percent of its subscriber base with the advanced video system.

Comcast credited X1 with significantly reducing its video subscriber churn. The analysts at MoffettNathanson said that Comcast's X1 is now deployed to roughly 5.6 million U.S. homes.

Comcast also grew its high-speed Internet customer base by 320,000 subscribers, its best performance in six years and above the 300,000 quarterly subscriber gains that Wall Street had expected. The company ended the quarter with 22.868 million Internet customers -- up by more than 1 million from the 21.586 million it counted at the end of the year-ago quarter. 

Jayant also expects broadband to grow even more for Comcast in the fourth quarter.

"Cable continues to take high-speed data (HSD) share away from [satellite]," he said. "And cord-cutters still need robust Internet access, so we are expecting more than 348,000 net HSD additions." 

Other analysts agreed on the positive outlook for Comcast. In evaluating Comcast's third quarter results, the analysts at Jefferies said that investors are getting distracted by Comcast's wireless comments and its increase in its cable capital spending. "Solid headline results were overshadowed by concerns over wireless strategy, the implied 4Q slowdown in buybacks, and increased Cable capex guidance," Jefferies analysts said in a note to investors. "In our view, these fears are significantly overblown and we continue to like Comcast for its attractive Cable growth and steady margins, improving NBCU assets, and extraordinary shareholder return potential. We recommend buying on weakness."

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