On Thursday, Deutsche Bank adjusted its share price target for FOX Corp. (NASDAQ:FOXA), increasing it to $39 from $38, while maintaining a Buy rating on the stock.
The media company's performance surpassed expectations with a robust EBITDA increase attributed to controlled expenses. Revenue also exceeded forecasts due to a slight uptick in affiliate revenue across both Cable and TV segments, coupled with a marginal rise in Cable advertising and TV Content & Other revenue.
The bank's analyst noted that FOX Corp.'s financial results led to a revision of the EBITDA projections for the years 2024 through 2026. This revision has prompted the upward adjustment of the price target.
The new target reflects a valuation of 5.6 times the forecasted 2025 EBITDA and suggests an 11.5% free cash flow yield for the fiscal year 2025, which is seen as favorable when compared to the current stock price valuation of 5.5 times the projected 2024 EBITDA and a 9.7% free cash flow yield.
FOX Corp.'s recent financial achievements have been recognized by the market, as evidenced by the positive outlook from Deutsche Bank. The slight but significant increases in various revenue streams, particularly affiliate revenue, have contributed to the company's financial health. This, in turn, has influenced the bank's decision to raise the stock's price target.
The analyst's commentary underscores the company's success in delivering a solid EBITDA beat, primarily driven by effective expense management. This financial discipline, combined with revenue growth, has been instrumental in improving the company's valuation metrics.
InvestingPro Insights
FOX Corp. (NASDAQ:FOXA) has been showing a strong financial discipline, as reflected in its latest EBITDA performance that exceeded market expectations. According to InvestingPro data, FOXA is trading at a low P/E ratio of 9.9, which is attractive relative to its near-term earnings growth. This aligns with the positive sentiment from Deutsche Bank's revised price target. The company's revenue for the last twelve months as of Q3 2024 stands at $13.92 billion, despite a decrease of 6.66% in revenue growth during the same period. The current market capitalization is $15.14 billion.
Two notable InvestingPro Tips for FOX Corp. are the aggressive share buyback management has been undertaking and the high shareholder yield, which is a positive indicator for investors looking for returns. Additionally, FOX Corp. has raised its dividend for three consecutive years, suggesting a commitment to returning value to shareholders. For those interested in further insights, InvestingPro offers additional tips on FOX Corp. that could provide a deeper understanding of its investment potential. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and find out more about the 11 additional InvestingPro Tips available for FOX Corp.
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