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On Monday, Wolfe Research adjusted its stance on FOX Corp. (NASDAQ:FOXA), downgrading the stock from Peer Perform to Underperform with a price target (PT) of $48.00. The move reflects the firm’s view of the company’s limited direct-to-consumer (DTC) prospects and challenges in the linear advertising space due to a softening macroeconomic environment. Despite the downgrade, InvestingPro data shows FOX maintains a perfect Piotroski Score of 9, indicating strong financial health, with a solid current ratio of 2.5x and moderate debt levels.
The research firm acknowledged FOX Corp.’s strategic positioning for the cord-cutting trend, highlighting its focus on sports and news content, as well as its low-risk free ad-supported streaming television (FAST) strategy through Tubi. Despite these strengths, Wolfe Research expressed concerns about the long-term sustainability of Fox News’ demographic and the defense of its sports rights portfolio against streaming services with larger scale expanding into sports. The company has demonstrated strong financial performance, with revenue growth of 4.29% and an impressive return on equity of 20%.
The downgrade is based on a multiple of 6.0 times the calendar year 2026 enterprise value to EBITDA (EV/EBITDA) for Cable, 5.0 times for TV (excluding Tubi), and 2.2 times CY’26 EV/Sales for Tubi. Additionally, the valuation includes FOX Corp.’s stake in Flutter, options in FanDuel, and tax shield, collectively valued at $5.5 billion.
According to Wolfe Research, FOX Corp. is currently trading at 7.8 times the next twelve months (NTM) EV/EBITDA based on Wolfe’s calendar year 2025 EBITDA estimates. This valuation does not provide a significant margin of safety for an entity primarily engaged in linear business, which faces near-term advertising revenue risks and long-term concerns about its terminal value.
In other recent news, FOX Corporation has been the focus of several analyst updates and strategic announcements. UBS has raised its price target for FOX shares to $63, maintaining a Buy rating, citing FOX’s strong position in the evolving video landscape and improved revenue and EBITDA growth estimates. Similarly, Loop Capital Markets has increased its price target to $62, also maintaining a Buy rating, and highlighted FOX’s robust performance, particularly in prime time ratings and advertising. BofA Securities has maintained its Buy rating and a $60 price target, noting FOX’s resilience in focusing on live content such as news and sports, with positive revenue projections for the upcoming fiscal quarter.
FOX Corp CEO Lachlan Murdoch discussed plans for a new streaming service to reach "cord cutters," led by Pete Distad, a former Apple (NASDAQ:AAPL) TV+ executive. This service aims to expand FOX’s reach beyond traditional cable bundles, leveraging existing technology without incurring additional programming costs. The company plans to launch the service in time for the fall football season, building on the success of Fox Nation, which has attracted between 2 million and 2.5 million subscribers.
Meanwhile, Newsmax has seen a dramatic rise and fall in its stock price following its IPO. The stock initially surged by 2,230% but recently fell by 25% in premarket trading. This volatility has drawn significant attention, reflecting patterns seen in other "meme stocks." Newsmax’s early stock performance briefly surpassed the market capitalization of Fox Corporation, highlighting the intense interest from traders and media.
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