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Fox Analysts Talk Sports, Politics, Cord-Cutting After Q4 Print

Dave Royse

Fox Corp (NASDAQ: FOXA) reported better-than-expected fourth-quarter earnings Wednesday as the newly pared-down company bucked industry trends.

The beat came despite lower ad revenue and losses in cable subscribers, with tailwinds from gains in affiliate feeds and retransmission revenue.

The Analysts

Morgan Stanley’s Benjamin Swinburne maintained an Overweight rating on Fox with a $42 price target.

Credit Suisse analyst Douglas Mitchelson maintained an Outperform with a $45 target price.

UBS analyst John Hodulik maintained a Neutral rating with a $40 price target.

The Takeaways 

Fox, which began trading in March as a standalone TV company after the breakup of the former 21st Century Fox company, reported earnings of 73 cents per share on $2.5 billion in revenue. The news sent the stock higher after Wednesday’s report, but it was giving those gains back Thursday.

Morgan Stanley’s Swinburne noted worsening subscriber trends for cable networks, but said he still expects affiliate revenue will grow by about 8-9% on a full-year basis, as Fox News remains the top-watched cable news channel.

While people may be cutting the cable cord, they’re going to make dates to watch Fox in the coming year, analysts said. 

Calendar year 2020 growth is expected thanks to Fox having the Super Bowl this coming winter, said Credit Suisse’s Mitchelson.

Politics play into the success Mitchelson is expecting.

View more earnings on FOXA

For a news network deeply embedded in the current political culture, the 2020 presidential campaign is likely to drive viewership and ad sales, he said. 

Share Buybacks

Analysts are also factoring in expected share buybacks of about $750 million in fiscal 2020 as part of their view of the stock’s prospects.


Fox has made it clear it is going to try to be more than just news and sports cable channels as people continue to give up cable.

Fox has taken a minority stake in the sports gaming business The Stars Group and a majority stake in personal finance platform Credible. This week, the company announced the acquisition of the animation studio Bento Box.

Analysts are taking a wait-and-see stance on the new businesses.

“Ultimately these modest-sized investments do not change our view of buyback expectations for Fox, and the company will have to prove over time these acquisitions are driving incremental growth and shareholder value,” Swinburne said. 

UBS’ Hodulik said the FOX Bet sports gambling app from Fox and The Stars Group is on track to launch ahead of the upcoming NFL season, and local stations have started to benefit from sports betting advertising in several markets.

The Bento Box acquisition will help Fox with in-house animation production, but the benefits of the Credible Labs acquisition "are less clear," the analyst said. 

Price Action

Fox shares were dropping by 5.05% to $35.17 at the time of publication Thursday. 

Related Links

Guggenheim Bullish On New Fox, Points To 'Industry-Leading Mix Of Live News And Sports Content Delivery' 

Credit Suisse: New Fox Could Be Fastest Growth Option In Media

Latest Ratings for FOXA

Date Firm Action From To
Jul 2019 Downgrades Buy Neutral
Jun 2019 Initiates Coverage On Buy
Apr 2019 Reinstates Market Perform

View More Analyst Ratings for FOXA
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