CFRA has adjusted its price target for FOX Corp. (NASDAQ: FOXA) shares, increasing it from $35.00 to $38.00 while maintaining a Hold rating.
The media company, known for its focus on sports and news content across various channels, has a stock beta of 0.78, indicating lower price volatility compared to the broader market.
The revised price target is based on a forward Total Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (TEV/EBITDA) multiple of 6.8 times the firm's fiscal year 2025 (ending in June) EBITDA estimate of $6.51 billion.
This valuation is in line with the three-year historical average.
Earnings per share (EPS) projections for fiscal year 2024 have been reduced by $0.10 to $3.80, and the estimate for fiscal year 2026 is set at $3.70. Revenue forecasts for the two fiscal years are $15.1 billion and $14.8 billion, respectively.
In its most recent quarterly report, FOXA disclosed a Q4 EPS of $0.68, which fell short of the consensus estimate by $0.13. The Television segment, which accounts for 52% of total revenue, experienced a 2% year-over-year revenue increase, with affiliate fees growing by 5%, despite a 1% decline in advertising revenue and a 19% decrease in other revenues.
The Cable Network Programming division, comprising 48% of revenue, also reported a 2% year-over-year increase, with both affiliate fees and advertising revenues rising by 2%.
The company's free advertising-supported streaming platform, Tubi, continues to grow, now boasting 81 million monthly viewers. However, financial details regarding Tubi's performance were not disclosed.
CFRA is also closely monitoring the recently announced joint venture between FOX Corp., Disney (DIS 88 ), and Warner Bros. Discovery (NASDAQ:WBD) that aims to offer major sports leagues and events to non-subscribed streaming viewers.
Fox Corporation reported a strong performance for the quarter with a slight miss in total revenue, which reached $3.09 billion against analysts' expectations of $3.10 billion. Fox Corp also reported a 5% increase in affiliate fees and a 2% increase in revenue for its cable-network programming division.
On an adjusted basis, the company outperformed expectations by earning 90 cents per share, compared to the anticipated 81 cents per share.
InvestingPro Insights
FOX Corp. (NASDAQ: FOXA) appears to be navigating its financial landscape with strategic maneuvers that could interest investors. Notably, the company's management has demonstrated confidence in FOXA by aggressively buying back shares. This is often seen as a bullish signal, reflecting the belief of the company's leadership in its own stock's value. Additionally, FOXA has shown a commitment to returning value to shareholders by raising its dividend for three consecutive years, a trend that aligns with the company's stable financial position as indicated by recent data.
InvestingPro Data shows FOXA's market capitalization at $17.98 billion, with a P/E ratio of 12.09, which is relatively low compared to near-term earnings growth, and a PEG ratio of just 0.22, suggesting that the stock may be undervalued given its earnings growth potential. The company's revenue for the last twelve months as of Q3 2024 stood at $13.92 billion, although experiencing a slight decline of 6.66% in revenue growth over the same period. Despite this, FOXA's gross profit margin remains strong at 34.75%, underscoring its ability to maintain profitability.
These financial metrics, coupled with the InvestingPro Tips that FOXA is trading at a low P/E ratio relative to near-term earnings growth and its stock generally trades with low price volatility, could be of interest to investors looking for stable growth opportunities. For those seeking more in-depth analysis, additional tips are available on InvestingPro, which currently features 10 more insights on FOX Corp. to help investors make informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.