February 28, 2011 / 10:15 AM / 9 years ago

Goldman Sachs says US cable sector attractive

Feb 28 (Reuters) - Goldman Sachs raised its rating on the cable and satellite industry in the United States to “attractive” from “neutral,” and said the sector’s growth rate is expected to be higher than that of the broader market.

The brokerage re-initiated its coverage of Comcast Corp (CMCSA.O) with a “buy” rating and a price target of $31, citing the cable company’s deal with NBC Universal as favorable.

“Strategically, Comcast now has a commanding seat at the table in future content and distribution negotiations, as well as an important hedge against rising content costs and over-the-top video risks,” the brokerage said in the note.

It also said Comcast could repurchase nearly one-third of current shares outstanding over the next five years, and over half of its shares during the next ten years.

The brokerage, which has a “buy” rating on DirecTV Group’s DTV.O stock, expects bottomline growth in the sector to be driven by stronger EBITDA, and shrinking share counts on stock repurchases.

The cable and satellite sector trades at a significant discount to the market, the brokerage added.

Shares of Comcast closed at $25.26, and those of DirecTV closed at $46.03 on Friday on the Nasdaq.

(Reporting by Gowri Jayakumar in Bangalore; Editing by Roshni Menon)

((gowri.jayakumar@thomsonreuters.com)) Keywords: CABLE RESEARCH/GOLDMANSACHS

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