On Tuesday, Guggenheim maintained its Buy rating on FOX Corporation (NASDAQ:FOXA) stock, increasing the price target to $45 from $44. The firm cited FOX's content lineup, including regular-season NFL games, an expanded college football offering, and Fox News programming, as key factors for audience growth.
The analyst from Guggenheim updated their model for FOX, reflecting a positive outlook on the continued demand for live news and sports content, which is expected to drive advertising and viewer numbers in the second and third fiscal quarters. This anticipated strength has led to a slight increase in the projected full-year 2025E EBITDA to $3.12 billion, up from the previous estimate of $3.09 billion.
The forecast for FOX's total company advertising revenue shows a sequential improvement, with a 7.8% increase in the first fiscal quarter of 2025 compared to a flat fourth fiscal quarter. The growth is attributed to several factors, including the performance of Tubi, solid political advertising demand, live sports, and rising Fox News ratings, although some tempering is expected due to preemptions.
In terms of affiliate fee growth, the first fiscal quarter is projected to see a 3.9% increase, despite an anticipated 8-9% range in subscriber declines. The estimate for the first fiscal quarter's total company EBITDA remains steady at $904 million.
The revised 12-month price target of $45 reflects a dollar increase from the previous target, underscoring Guggenheim's confidence in FOX Corporation's stock performance over the coming year.
In other recent news, FOX Corp has been the subject of significant developments. Goldman Sachs reaffirmed its Conviction Buy rating on FOX Corp shares with a steady price target of $46.00, anticipating the company to achieve a first-quarter earnings of approximately $874 million for fiscal year 2025. They forecast modest increases in both fees and advertising revenues within FOX Corp's Cable Networks division, largely due to the strong performance of Fox News Channel.
Rupert Murdoch recently concluded a pivotal hearing in Nevada, seeking amendments to the family trust to ensure the control of his media companies, including FOX Corp, remains with his eldest son, Lachlan Murdoch, after his passing. This development has become a focal point of contention regarding succession plans.
In the realm of investor relations, Seaport Global Securities has downgraded its rating of Fox Corp from Buy to Neutral, reflecting the current valuation of Fox Corp shares. Despite the potential benefit from political advertising spending, Seaport's rating change suggests limited upside potential in the near term.
These recent developments underscore the dynamic nature of FOX Corp's operations and strategies, highlighting the potential for Fox News Channel and local TV stations to benefit from increased advertising revenues due to election coverage.
InvestingPro Insights
Following Guggenheim's optimistic outlook on FOX Corporation (NASDAQ:FOXA), InvestingPro data and tips provide further context to investors considering the media giant's stock. According to InvestingPro, FOX Corporation has been actively buying back shares, signaling management confidence in the company's value. Additionally, FOXA has consistently raised its dividend over the past four years, a trend that reflects its commitment to returning value to shareholders. These InvestingPro Tips are particularly relevant as they underscore the company's shareholder-friendly actions and financial stability.
On the financial metrics front, FOX Corporation boasts a market capitalization of $18.14 billion, with a trailing twelve-month P/E ratio of 11.65, which is relatively low when paired with near-term earnings growth. This indicates that the stock may be undervalued compared to its earnings potential. Furthermore, the company's stock is trading near its 52-week high, having seen a strong return over the last three months, with a price total return of 20.09%. These figures are testament to the company's robust performance and market confidence.
Investors looking for more insights can find additional InvestingPro Tips for FOX Corporation at https://www.investing.com/pro/FOXA, which includes a wealth of data to help make informed investment decisions.
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