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12/16/2016
Cable will have big 2017 thanks to lower taxes, fewer regs, smaller bills, bullish analyst says
While Comcast’s stock price has nearly tripled over the last five years, and Charter’s has nearly quadrupled, cable-bullish MoffettNathanson analyst Craig Moffett said there’s still plenty of room for the industry to grow in 2017.
“We believe there are three separate factors that argue in favor of further multiple expansion in 2017: Lower taxes, less regulation and lower capital intensity,” Moffett said in a note to investors today.
Of course, lower tax rates under the far-right Trump administration would benefit most American businesses in the short term. But a “domestically-based high tax-payer” like Comcast, Moffett estimated, would see its share price spike by 21.4% if the current tax rate of around 38% was cut to 15%.
Meanwhile, removal of regulatory burdens like Title II will also bolster cable operators, the analyst said.
“We have long believed that the most cogent bear argument for cable stocks is that broadband prices will eventually be regulated,” Moffett said. At its heart, that’s what Title II reclassification was all about.
