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Comcast Split Seen Boosting Deal Potential, UBS Says

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Comcast's (CMCSA) plan to spin off NBCUniversal and Sky creates a clearer path for future mergers and acquisitions while reinforcing the long-term investment case for the company, UBS Securities said Monday in a report.

Comcast will form two publicly traded companies, with the cable business remaining standalone and the media assets moving into a new entity. Comcast plans to retain a 19.9% stake in the media company and monetize that holding within a year of the separation, a move that should help strengthen the balance sheet, UBS said.

The breakup makes both companies more likely to pursue deals over time, given competitive pressures in broadband and the smaller scale of NBCUniversal within the media landscape, UBS said.

Recent transactions in the sector have intensified consolidation discussions, the report said.

Current trading levels imply a low valuation for Comcast's media assets relative to peers, a gap that may narrow once the businesses are separated, the report said.

UBS maintained its neutral rating on Comcast stock with a $32 price target.

Price: $24.46, Change: $+0.23, Percent Change: +0.97%

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