Citing “stiffening political headwinds,” a top-rated telecommunications analyst said the merger between Comcast and Time Warner Cable, although likely, is not the sure thing it was. Reuters

Big cable just got knocked down a peg. Citing uncertainty over net neutrality regulation and an increasingly unpopular merger proposal between Comcast Corp. and Time Warner Cable Inc., a top-ranked telecommunications analyst Tuesday downgraded stocks for major cable companies from “buy” to “neutral.”

The reduced rating comes two weeks after Tom Wheeler, chairman of the U.S. Federal Communications Commission, publicly threw his weight behind a plan to reclassify high-speed Internet as a public utility under Title II of the Communications Act, thereby subjecting Internet service providers to tougher regulations.

Even as the debate over net neutrality has accelerated over the last few weeks, cable stocks have proved surprisingly resilient. In part, that’s because the market may believe a Republican Congress -- or a future FCC headed by a Republican appointee -- will roll back Title II reclassification, Moffett said in an investor note. And even if Title II were to become a reality, the prevailing wisdom is that the FCC will provide exemptions to prohibit rate regulation, a process known as forbearance.

Moffett is not so sure. “At its core, Title II is about price regulation,” he wrote. “It would be naive to believe that the imposition of a regime that is fundamentally about price regulation, in an industry that the FCC has now repeatedly declared to be noncompetitive, wouldn’t introduce risk to future pricing power.”

Moffett also said Comcast’s proposed takeover of Time Warner Cable is not the sure thing it once was. Citing “stiffening political headwinds,” he said the $45 billion deal -- first announced last year -- now has a 60 percent chance of being approved by federal regulators, down from 70 percent. “To be sure, we still believe the deal is more likely than not to be approved,” he said.

Moffett is a partner and senior analyst for MoffettNathanson LLC. He is frequently cited as the top analyst in the telecom and cable industries. In Tuesday’s note, MoffettNathanson downgraded stocks for Comcast, Time Warner Cable and Charter Communications to “neutral.” Cablevision Systems Corporation, the least performing stock, was rated “sell.”

All things considered, however, the cable industry is still in good shape. “Mostly ... our downgrade is simply a matter of a sector that has priced in an awful lot of good news and very little bad,” Moffett wrote.

Christopher Zara is a senior writer who covers media and culture. News tips? Email me here. Follow me on Twitter @christopherzara.