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On Monday, Guggenheim maintained a Buy rating on FOX Corp. (NASDAQ:FOXA) and increased the price target to $50.00 from the previous $45.00. The firm's decision follows FOX Corp.'s fiscal first-quarter performance, which surpassed both Guggenheim's and consensus estimates, driven by a broad-based beat across its segments, notably in Cable Networks.
The revenue growth for the company accelerated to 11%, up from 2% in the fourth fiscal quarter, benefiting from several factors. Record political advertising revenue, which exceeded the 2020 figures including the Georgia Senate runoff, played a significant role. Additionally, there was a 47% increase in 'Other' revenue growth, a turnaround from a 11% decline in the previous quarter, attributed to sublicensing timing. Affiliate revenue trends also showed improvement due to pricing strategies and a moderation in subscriber declines.
FOX Corp.'s ad-supported streaming service, Tubi, saw a revenue growth of 19%, indicating strong performance excluding political ads. Management has noted that this growth has continued into the second fiscal quarter. The company's leadership emphasized robust audience trends, especially in the News segment.
Looking ahead, Guggenheim highlights the fiscal year 2025 as an events-driven year for FOX Corp., with expectations of revenue boosts from major events such as the World Series, the U.S. election cycle, and Super Bowl LIX. The raised 12-month price target to $50 reflects Guggenheim's optimism based on higher forecasts for the company.
In other recent news, Fox Corp. recently experienced a series of significant developments. CFRA analyst Kenneth Leon upgraded Fox Corp. from 'Sell' to 'Hold' and raised the price target to $46, following a strong performance in the September quarter. The earnings per share (EPS) estimates for fiscal years 2025 and 2026 were revised upwards, reflecting the company's robust performance.
Fox Corp. reported an EPS of $1.78 for the September quarter, exceeding the consensus estimate of $1.13. This beat was driven by a 5.6% revenue increase, spurred by the election news cycle and live sports events. The company's financial health was also noted, with cash and cash equivalents amounting to $4.1 billion and a debt level of $7.2 billion.
The company exceeded Wall Street's revenue forecasts for the first quarter, largely attributed to a surge in political advertising. Fox reported an 11% rise in advertising revenue, reaching $1.33 billion. The company's total quarterly revenue was $3.56 billion, surpassing the expected $3.37 billion. Fox's Cable Network Programming division reported revenue of $1.60 billion, exceeding analysts' projection.
InvestingPro Insights
FOX Corp.'s (NASDAQ:FOXA) recent performance and Guggenheim's optimistic outlook are further supported by real-time data from InvestingPro. The company's P/E Ratio (Adjusted) of 12.3 for the last twelve months as of Q4 2024 suggests that the stock may be undervalued relative to its earnings potential. This aligns with an InvestingPro Tip indicating that FOX is "Trading at a low P/E ratio relative to near-term earnings growth."
Moreover, FOX Corp.'s financial health appears robust. The company has been profitable over the last twelve months, with a Revenue of $13.98 billion USD and an Operating Income Margin of 17.47% for the same period. This profitability is complemented by another InvestingPro Tip noting that "Management has been aggressively buying back shares," which often signals confidence in the company's future prospects.
For investors interested in dividend income, FOX Corp. offers a Dividend Yield of 1.29% as of the latest data, with an impressive Dividend Growth of 8.0% over the last twelve months. An InvestingPro Tip highlights that the company "Has raised its dividend for 4 consecutive years," demonstrating a commitment to shareholder returns.
These insights, along with 7 additional InvestingPro Tips, provide a comprehensive view of FOX Corp.'s financial position and market performance. Investors seeking more detailed analysis can explore the full range of tips and metrics available on InvestingPro.
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