On Wednesday, CFRA, a notable financial research firm, upgraded the price target for FOX Corp (NASDAQ:FOXA) shares, lifting it to $35 from the previous $34, while retaining a Hold rating on the stock. The adjustment follows FOX Corp's report of steady performance, bolstered by its focus on sports and news across various media platforms.
FOX Corp is recognized for its consistent results, which have been supported by a distinct strategy that leverages sports and news content. The revised price target is based on a forward Total Enterprise Value (TEV) to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) multiple of 7.0 times the firm's fiscal year 2024 EBITDA projection of $2.85 billion. This valuation is in line with the company's three-year historical average of 6.8 times.
The company's financial outlook has also been adjusted, with an increase in the fiscal year 2024 earnings per share (EPS) estimate by $0.40 to $3.75, and the fiscal year 2025 EPS forecast by $0.10 to $3.90. Revenue projections for these periods are set at $14.1 billion and $15.2 billion, respectively. FOXA's third-quarter EPS was reported at $1.40, surpassing the consensus estimate by $0.44.
A detailed look at FOX Corp's revenue streams revealed a 22% year-over-year decline in Television unit revenue, which accounts for 56% of the total revenue. This decrease was primarily due to a 40% drop in advertising revenue, absent the Super Bowl event, although affiliate fees and other revenues each grew by 9%. The Cable Network Programming segment, representing 44% of revenue, experienced a 6% year-over-year decrease, with a modest 1% increase in affiliate fees but a 6% decrease in advertising revenue.
Additionally, FOX Corp's free advertising-supported streaming platform, Tubi, continues to grow its audience. However, the company has not yet disclosed financial details regarding Tubi's performance. The firm is also monitoring FOX Corp's recently announced joint venture with Disney (NYSE:DIS) and Warner Bros. Discovery (NASDAQ:WBD), which aims to provide streaming services for major sports leagues and events to viewers who do not subscribe to cable TV bundles.
InvestingPro Insights
As FOX Corp (NASDAQ:FOXA) navigates the dynamic media landscape, real-time metrics from InvestingPro provide a clearer picture of the company's financial health and market performance. With a current market capitalization of $15.75 billion and a P/E ratio standing at a competitive 18.25, FOXA shows signs of a stable investment. This stability is further underscored by a P/E ratio adjusted for the last twelve months as of Q2 2024, which is an attractive 9.83, hinting at potential undervaluation.
InvestingPro Tips highlight that FOXA has been proactive in enhancing shareholder value, evidenced by management's aggressive share buyback strategy and a consistent increase in dividends for the past three years. Additionally, the company's stock trades with low price volatility, which may appeal to investors seeking less turbulent assets. For those interested in diving deeper into FOXA's potential, there are 7 additional InvestingPro Tips available, which can be explored further with the use of coupon code PRONEWS24 for an extra 10% off on a yearly or biyearly Pro and Pro+ subscription.
FOXA's recent performance also shows a dividend yield of 1.61% and a dividend growth of 4.0% in the last twelve months as of Q2 2024. The company's commitment to returning value to shareholders is clear and could be a deciding factor for investors seeking steady income streams. With the next earnings date on May 8, 2024, investors and analysts alike will be keenly watching to see if FOXA can maintain its positive trajectory.
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