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Citi sees upside for fox stock as valuation model shifts

Published 18/12/2024, 10:48
Citi sees upside for fox stock as valuation model shifts

Citi sees upside for fox stock as valuation model shifts

FOXA
1.09%

On Wednesday, FOX Corp (NASDAQ:FOXA), currently trading near its 52-week high at $49.07, received a positive adjustment from Citi, with its price target being raised to $58 from the previous $50. The firm has sustained its Buy rating on the company's stock, which have delivered an impressive 68% return year-to-date. According to InvestingPro data, the stock's RSI suggests it's in overbought territory.

The adjustment comes as Citi updates its model in anticipation of FOX Corp's second quarter fiscal year 2025 results. The company, which maintains a strong financial health score of "GREAT" on InvestingPro, currently trades at a P/E ratio of 11.35x.

According to the firm, while their estimates for the company have not changed, they have advanced the valuation year to calendar year 2026 and increased the free cash flow (FCF) multiple from approximately 10 times to 11.5 times.

The analyst from Citi stated, "We are updating our model prior to F2Q25 results. Our estimates remain unchanged, but we roll our valuation year forward to CY26 and expand our FCF multiple from ~10x to ~11.5x. Our target price moves to $58 from $50, and we maintain our Buy rating."

This price target uplift reflects a more optimistic valuation framework applied by Citi, factoring in the company's future potential. The decision to maintain the Buy rating indicates that the firm continues to see FOX Corp as a favorable investment.

Investors and market watchers will be keeping a close eye on FOX Corp as it approaches its second quarter fiscal year 2025 earnings release on February 5, 2025, to see if the company's performance aligns with Citi's expectations. For deeper insights into FOX Corp's valuation and 11 additional exclusive ProTips, consider accessing the comprehensive research available on InvestingPro.

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In other recent news, Fox Corporation experienced notable financial growth in the first quarter of fiscal year 2025. The media company reported an 11% increase in total revenues, hitting $3.56 billion. The EBITDA also rose by 21%, crossing the $1 billion mark, while the net income reached $827 million. This significant growth was largely driven by high audience engagement across Fox News and sports programming.

In response to these strong financial results, Citi has raised its price target for Fox Corporation from $47 to $50, maintaining a Buy rating on the stock. This decision indicates Citi's confidence in the media company's performance and future prospects.

Furthermore, Fox Corporation's Annual Meeting of Stockholders saw the election of several directors and the ratification of Ernst & Young LLP as the company's independent auditor for the upcoming fiscal year. The shareholders also approved, on an advisory and nonbinding basis, the compensation of named executive officers.

Fox Corporation's streaming service, Tubi, also reported a revenue growth of 19%, and is projected to exceed $1 billion for the fiscal year. Despite challenges such as a decline in NFL advertising revenue and increased sports rights fees, the company's executives have expressed optimism about improving subscriber trends and the political advertising landscape. These are recent developments that highlight the ongoing financial performance and market position of Fox Corporation.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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