Brean Capital's Q3 Cable Earnings Preview

Brean Capital issued a Q3 preview on cable companies Tuesday.

Analyst Todd Mitchell noted that "cable stocks have fared poorly," underperforming the broader market.

According to Mitchell, "Underperformance stems from a number of factors; primarily, rising capital intensity and increased uncertainty as HSD matures and investment increases in TV Everywhere (TVE) initiatives in an effort to enhance competitive positioning against an onslaught of over-the-top (OTT) initiatives."

Mitchell concluded that he is "more sanguine about the prospects for the rest of the industry in light of increased competition on a number of fronts and the likelihood that clarity on the Comcast-TWC deal is not likely to emerge before year end."

Here are highlights from the report and the firm's current ratings:

Comcast Corporation CMCSA - Buy, $65 price target

"Reports 3Q14 results on Thursday, October 23 before the open. We now look for a 4 percent increase in 3Q14 total revenue to $16.8 billion, down from our prior estimates of $16.9 billion, and a 5 percent increase in OCF to $5.62 billion, up from our prior estimate of $5.56 billion. However, our 3Q14 EPS estimate of $0.72, up from $0.65 a year ago, is unchanged. Our estimates compare to consensus estimates for 3Q14 for revenue of $16.8 billion, OCF of $5.65 billion, and EPS of $0.71."

Cablevision Systems Corporation CVC - Hold, no price target

"Reports 3Q14 results on Thursday, November 6 before the open. We look for a 3 percent increase in total revenue to $1.5 billion, underpinned by 4 percent growth in ARPU per RGU and a 1 percent decline in total RGU. We expect a 5 percent increase in EBITDA to $462 million, primarily due to lower non-core costs. Our EPS estimate is $0.20, down from $0.23. Consensus estimates call for revenue of $1.6 billion, EBITDA of $435 million and EPS of $0.19."

Time Warner Cable Inc TWC - Buy, $186 price target

"Reports 3Q14 results on Thursday, October 30 before the open. We now look for a 4 percent increase in 3Q14 total revenue to $5.7 billion, down from our prior estimate of $5.8 billion, and a 7 percent increase in EBITDA to $2.14 billion, up from our prior estimate of $2.1 billion. As a result, we are raising our 3Q14 EPS estimate to $1.95 from $1.90, up 8 percent from $1.80 a year ago. Our estimates compare to consensus estimates for 3Q14 for revenue of $5.7 billion, EBITDA of $2.1 billion, and EPS of $1.92."

All three firms traded up on Tuesday with Cablevision Systems Corporation leading the pack at $18.33, up 3.44 percent.