On Friday, Seaport Global Securities shifted its stance on Fox Corp. (NASDAQ:FOXA) stock, raising from Neutral to Buy. The firm set a new price target of $37.00 for the media company's shares.
The upgrade is grounded in several key factors, including the anticipation of strong advertising spending due to the upcoming Presidential election cycle, a turnaround in certain ratings challenges, and solid sports programming viewership.
The analyst from Seaport Global Securities highlighted the potential for record Presidential election advertising revenue to bolster Fox Corp.'s financials. This cyclical event is expected to drive significant ad spending, which in turn could positively impact the company's stock performance.
Additionally, the analyst noted that previous challenges with Fox News ratings and direct-response advertising have been resolved, setting the stage for a more stable and positive outlook.
Sports programming continues to be a strong suit for Fox Corp., maintaining solid ratings momentum. This consistent viewership is an essential component of the company's revenue stream, as sports events attract a significant audience and, consequently, advertisers.
Moreover, the company's ad-supported video-on-demand (AVOD) service, Tubi, is reportedly experiencing growth in advertising revenue, potentially in the high-teens percentage range.
The firm also underscored Fox Corp.'s financial position, emphasizing its strong balance sheet. This financial stability is seen as a key enabler for the company to continue delivering healthy capital returns.
The upgrade and new price target reflect a belief in Fox Corp.'s ability to capitalize on upcoming opportunities and navigate past challenges. The media company's strategic positioning ahead of significant political events and its diversified portfolio of services are expected to drive growth and investor interest.
InvestingPro Insights
With Seaport Global Securities upgrading Fox Corp. (NASDAQ:FOXA) to a Buy status, it's worth noting that the company's financial health and strategic maneuvers have been recognized by other market observers as well. Fox Corp.'s solid financial footing is supported by a market capitalization of $14.15 billion, a testament to its substantial presence in the media industry. The company's commitment to shareholder returns is evident, with a notable P/E ratio at 17.04 and a more attractive adjusted P/E ratio for the last twelve months as of Q2 2024 at 9.19, signaling potential undervaluation relative to earnings.
Two InvestingPro Tips further underscore the company's financial prudence and investor-friendly moves: Fox Corp. has not only been aggressively buying back shares, showcasing confidence in its own value, but has also raised its dividend for three consecutive years, reflecting a commitment to providing consistent returns to shareholders. Additionally, the company's liquid assets surpass short-term obligations, indicating a robust liquidity position that can support operations and strategic investments.
Investors looking to dive deeper into Fox Corp.'s potential can explore additional InvestingPro Tips, which include predictions on profitability and performance metrics. With a total of 5 additional tips available on InvestingPro, investors can gain a more nuanced understanding of the company's outlook. Don't forget to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for deeper insights into Fox Corp. and other investment opportunities.
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