Citigroup analyst Jason Bazinet upgraded Fox Corp (NASDAQ:FOXA) from Neutral to Buy and raised the price target from $34 to $35.
On February 6, 2024, Walt Disney Co (NYSE:DIS), Fox, and Warner Bros Discovery, Inc (NASDAQ:WBD) announced a sports joint venture encompassing ~50% of US sports rights.
The analyst’s analysis shows that the JV will be a positive for Fox. As such, he modestly raised his revenue and EBITDA estimates in the fiscal years 2025 and 2026.
The analyst projected an EBITDA of $2.67 billion in the 2025 calendar year.
Beyond the benefit to estimates, Bazinet suspects the JV could be a positive for the multiple, as it places Fox on a firmer footing and reduces exposure to the secular pressures affecting the Pay TV ecosystem.
The updated price target is still predicated on ~10x the analyst’s calendar year 2024 free cash flow per share estimate.
The Justice Department is reviewing the JV as the proposed new streaming service has raised concerns about potential harm to consumers, media competitors, and sports leagues.
In February, Fox reported second-quarter 2023 revenues of $4.23 billion, down from $4.61 billion a year ago, above the consensus of $4.21 billion.
The adjusted EPS of $0.34 beat the consensus of $0.11.
Price Action: FOXA shares are up 0.88% at $27.65 on the last check Friday.
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