Loop Capital increased the price target for FOX Corp. (NASDAQ:FOXA) shares from $43.00 to $46.00, while maintaining a Buy rating on the stock. The firm based its decision on a variety of factors, including FOX's strategic emphasis on news and sports broadcasting, its avoidance of costly streaming service competition, and its current market valuation.
FOX News experienced a significant 75% growth in ratings among its core demographic during the September quarter. This rise is attributed to a combination of factors, including record levels of political fundraising expected to boost political advertising revenue. Additionally, the MLB playoffs featured larger market teams earlier on, which is anticipated to lead to higher viewership for the World Series. Furthermore, FOX is set to broadcast the Super Bowl in February, an event that traditionally garners extensive viewership.
The settlement of lawsuits by Smartmatic against Newsmax and OAN is seen as potentially setting a positive precedent for FOX. The firm also highlighted the untapped value of digital TV rights associated with FOX's sports contracts. As a result, Loop Capital has revised its earnings estimates for FOX upward.
The analyst addressed concerns regarding FOX's digital strategy, noting that the company's focus on live programming as opposed to general entertainment has proven effective. Confidence in the strength of the Fox News brand remains high, and the perceived risks are considered to be reflected in the stock's favorable valuation metrics, such as its EBITDA multiple of 5.6x and a 10% free cash flow yield.
FOX has been Loop Capital's media pick for 2024, and it has reportedly outperformed both traditional media companies and the S&P index. The firm's continued recommendation to buy FOX shares is based on the company's solid performance and strategic positioning in the media landscape.
FOX Corp has been subject to significant analyst attention and internal developments. CFRA downgraded FOX Corp to Sell, maintaining a $38 price target, citing anticipated lower revenue and earnings growth. The firm's earnings per share (EPS) estimates for FOXA are $3.80 for Fiscal Year 2025 and $3.70 for Fiscal Year 2026, with projected revenues of $15.1 billion and $14.6 billion, respectively. Guggenheim, on the other hand, maintained its Buy rating, citing an anticipated demand for live news and sports content, and increased its price target for FOX to $45.
Goldman Sachs reaffirmed its Conviction Buy rating on FOX Corporation with a steady price target of $46.00, expecting the company to achieve a first-quarter earnings of approximately $874 million for fiscal year 2025. The firm forecasts modest increases in both fees and advertising revenues within FOX Corp's Cable Networks division. However, Seaport Global Securities downgraded its rating of Fox Corp from Buy to Neutral, reflecting the current valuation of Fox Corp shares.
InvestingPro Insights
Recent data from InvestingPro aligns with Loop Capital's bullish outlook on FOX Corp. (NASDAQ:FOXA). The company's market cap stands at $18.3 billion, with a P/E ratio of 12.21, indicating a potentially undervalued stock relative to its earnings. This is further supported by an InvestingPro Tip highlighting that FOXA is trading at a low P/E ratio relative to near-term earnings growth.
FOX's financial health appears robust, with an InvestingPro Tip noting that liquid assets exceed short-term obligations, and the company operates with a moderate level of debt. This financial stability could provide FOX with the flexibility to invest in its core news and sports broadcasting segments, as emphasized in Loop Capital's analysis.
The company's strategic focus seems to be paying off, as evidenced by its strong recent performance. InvestingPro data shows a impressive 21.37% price total return over the last three months and a substantial 34.24% return over the past six months. This aligns with Loop Capital's observation of FOX outperforming both traditional media companies and the S&P index.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for FOX Corp., providing a deeper understanding of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.