Comcast shares rose 1% to a new high of $47.35 with about an hour left in Friday’s trading day. The stock has risen more than 30% over the past year, in part as a recognition of the efforts by Comcast and other media companies to finally mount their own alternatives to Netflix and other streaming services.
Ben Swinburne of Morgan Stanley, who maintains an “overweight” (buy) rating on Comcast shares, liked what he saw Thursday. “Tapping into the ratings/advertiser supply/demand imbalance in linear TV, Peacock has the potential to deliver premium video advertising inventory (and its typical premium CPM) to advertisers scrambling for engaged audiences in a brand safe environment,” he wrote in a note to clients.
Doug Mitchelson of Credit Suisse also gave high marks. “We found the user experience impressive, and the business model differentiated relative to other streaming services,” he wrote in a note to clients. ”
In particular, Mitchelson praised the fact that Peacock, with its emphasis on advertising, would mean less of a strict comparison with Netflix, which is where Disney and WarnerMedia are headed.
“We believe Peacock is likely to compete more with ad-supported services like YouTube, Hulu, Pluto and the pay TV bundle, and less with Netflix,” the analyst added. “In fact, Peacock’s business model does not support a major investment in original premium content relative to what Netflix is already spending.”
John Hodulik at UBS, who also has a “buy” on Comcast stock, was a bit less effusive about the rollout of Peacock, though he does see it becoming an important financial contributor to the company. “We believe a Flex + Peacock bundle could add pressure to cord cutting as traditional bundles are de-emphasized and free video options proliferate,” he cautioned in a note to clients.