What's behind the Comcast breakup? Hope for a Disney-like valuation
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Some Wall Street analysts think the NBCUniversal spinoff by parent company Comcast could set up merger possibilities on the cable side while boosting trading multiples on the media side — perhaps as high as 10 times earnings before interest, taxes, depreciation, and amortization. Telecommunications giant Comcast announced Monday that it's splitting off NBCUniversal and Sky from its cable and wireless segment. The company had been trading at 12-year lows prior to the news. The cable business could be set up to merge with cable company Charter Communications and the media business could more closely resemble Disney , according to Don Bilson, head of event-driven research at Gordon Haskett Research Advisors. "As a severed entity, the cable business will be set up to merge with CHTR and NBCU will look more like Disney, which trades for 10x EBITDA," Bilson wrote Monday to clients. "Whether it might be able to draw out a suitor willing to pay much more than that, as Warner Bros. was able to do, is a question that will be conversational." Doubters Other analysts don't see any logic to a merger on the cable side resulting from the breakup. "We don't see a Netflix -for-NBCU deal," Craig Moffett, senior analyst at MoffettNathanson, wrote in a Monday note to clients. "And no, we don't see a Comcast and Charter deal, either," he added, saying that benefits from overhead cuts as a result of a merger would be "minimal." Comcast has struggled for years, even after announcing plans to spin off several of its media properties – including CNBC, MS NOW and USA Network – into Versant earlier this year. Since the completion of the Versant spinoff in January, Comcast is down more than 9%, and since the announcement of that spinoff in November 2024, the stock is down more than 35%. CMCSA 5Y mountain Comcast shares over the past five years It was a seminal moment for investors when Comcast's share price fell below a trailing 5-times price-to-earnings multiple in October 2025. The stock currently has a forward price-to-earnings of 6.87, according to FactSet data. "Much of the 'stuck' feeling around CMCSA over the recent years has generally reflected a sense that the conglomerate structure limited strategic flexibility," cable and telecom analyst Kutgun Maral at Evercore ISI wrote Monday to clients, describing recent valuations below five-times earnings as "nonsensical." "Valuation, in our view, had become nonsensical in many respects, with shares trading at just 4.3x EV/EBITDA and 5.7x [price to free cash flow] on our 2027 estimates – multiples we think reflected investor unease over the broadband competitive backdrop and an unwillingness to underwrite the story without a strategic path," Maral wrote. As a result, other Wall Street analysts now anticipate improved valuations resulting from the NBCUniversal spin-off. Evercore ISI has a price target of $36 on Comcast, based on estimated 2027 valuations of 5.5x EV/EBITDA and 8.8x P/FCF. Benchmark Equity Research has a target EBITDA forward multiple of 6.5 for Comcast for 2026, and a forward multiple of 6.2 for 2027. "We do not anticipate any material dis-synergies from the new transaction apart perhaps for some mild increased two public entities corporate expense," Matthew Harrigan at Benchmark wrote Monday. He has a $44 price target on Comcast. Disclosure: Versant Media is the parent company of CNBC.