The Zacks Analyst Blog Highlights: Comcast, Time Warner Cable, Verizon Communication, ConocoPhillips and Marathon Oil

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Mar 07, 2012, 09:30 ET

CHICAGO, March 7, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Comcast Corporation (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), Verizon Communication Inc. (NYSE: VZ), ConocoPhillips (NYSE: COP) and Marathon Oil Corporation (NYSE: MRO).

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Here are highlights from Tuesday's Analyst Blog:

Comcast Eyes Home Security Market

In order to gain a strong foothold in the U.S. home security market, Comcast Corporation (Nasdaq: CMCSA) plans to accelerate the rollout of Xfinity Home service across all its domestic market. Apart from installing the product in 33% of its location, the company also plans to aggressively deploy the product across U.S. markets within a span of one year.

Earlier in June 2010, Comcast launched the product under the Xfinity Home Security brand. The house monitoring product and services includes a touch screen device, similar to a tablet, through which one can monitor their home when they are not there.

Subscribers can also control their house online through iPad/iPhone applications. They will also get 24 hours police and fire protection along with latest weather, sports and traffic reports.

Comcast also teamed up with iControl Networks, which provides software for online home management solutions. These services are available to subscribers starting from $29 per month, excluding the product installation.

We believe that the launch of home security or monitoring services will create a new revenue platform for Comcast, as the company can include the home solution package along with other bundled offerings to its subscribers, hence driving top-line growth for the company. As per the industry analysts, the home monitoring solution business will cover 20% of the total household in the U.S. by 2015.

The lucrative home security market has not only attracted Comcast but also lured other big players like Time Warner Cable (NYSE: TWC) and Verizon Communication Inc. (NYSE: VZ), which have also started offering similar services at attractive prices to its subscribers. We believe this will spur stiff competition in the home security market.

Comcast is continuously developing new products as well as creating new revenue streams in order to reduce the losses arising from loss of video subscribers as well as counter competition from other telecom carriers. The company has invested heavily in deploying DOCSIS 3.0 technology in order to provide speed of 50 to 105 mbps to its subscribers. Such faster downloading speeds will help the company to compete with 4G networks offered by other telecom operators.

We maintain our long-term Neutral recommendation for Comcast. Currently, Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Based in Philadelphia, Pennsylvania, Comcast Corp. offers various consumer entertainment, information, and communication products and services to the residential and commercial customers.

Conoco Expects Less, Divests More

Houston, Texas-based ConocoPhillips (NYSE: COP) has trimmed its production forecast for the year 2012, reflecting its ongoing asset divestiture program as well as three-year strategic plan.

The company now expects its production level to reach approximately 1.55 million barrels of oil equivalent per day (MMBoe/d) for this year, down from the previous expectation of 1.6 MMBoe/d and 2011 level of 1.62 MMBoe/d. This tepid expectation mainly confirms the company's $10 billion asset sale venture that will likely hit Conoco's output level in 2012. In the next five years, Conoco expects its production growth to average between 3% and 5% as the company focuses on liquid-rich ventures primarily in the U.S. and Canada.

ConocoPhillips is in the midst of a three-year strategic operation that includes an asset sale program, large-scale share buybacks and the spin-off of its refining unit. The company is on track with its first initiative, having already divested $20.2 billion of non strategic assets last year and intends to further offload $10 billion worth of properties this year. From 2013, the company may continue to divest $1 billion to $2 billion of mature assets per year.

The U.S. oil company intends to use the proceeds of the sale for its share repurchase program, under which Conoco repurchased 155 million shares for $11.1 billion last year. For 2012, the company aims to buy back shares of up to an additional $10 billion.

Again, in mid 2011, the company announced plans to split its upstream oil and gas exploration and production unit from its downstream refining segment into two standalone, publicly traded corporations. The new refining arm, Phillips 66, will likely have the refining capacity of 2 million barrels a day and will begin regular trading starting May 1, 2012.

We remain positive on the outlook for the new ConocoPhillips post-split, as it holds the promise of unlocking significant value. The idea behind the spin-off is to create value for shareholders who like the volatility in the refining business. The creation of two separate companies is also believed to be lucrative since the two separate entities will get to pursue greater opportunities in their respective market segments without the constraints of the parent company. It will also better serve the needs of both investor groups. We expect this move will narrow ConocoPhillips' return gap, which historically lags its peers.

However, considering the company's unpredictable global economic conditions, unpredictable supply-demand fundamentals of oil and gas, and international business risks, we remain on the sidelines and maintain our long-term Neutral recommendation.

The company, with competitors like Marathon Oil Corporation (NYSE: MRO), also holds a Zacks #3 Rank (short-term Hold rating).

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