Fox Corp. Price Target Lowered by Analyst Over "Steeper" TV Ad Revenue Decline

Rupert and Lachlan Murdoch - H - 2017

UBS analyst John Hodulik revised his target price from $40 to $28.

UBS analyst John Hodulik on Monday lowered his price target for Fox Corp. over concerns of far lower future advertising revenues amid the coronavirus pandemic.

"We now expect steeper U.S. advertising declines in 2020 with a more gradual recovery in 2021," Hodulik wrote in an investors note about the the slimmed-down media firm that emerged from the $71.3 billion sale of 21st Century Fox assets to The Walt Disney Company.

The company, comprised of Fox News Channel, Fox Sports and Fox Entertainment, as well as local TV stations, posted advertising revenue gains heading into the COVID-19 pandemic but has now, like the wider TV industry, been hit by a deep advertising downturn.

"Our estimates are updated to reflect lower near and medium-term advertising estimates," the UBS note stated as Hodulik lowered his price target for Fox Corp. from $40 to $28, while maintaining a neutral stock rating.

Total quarterly revenue for Fox Corp. earlier rose to $3.78 billion for the three months to Dec. 31, 2019, the company disclosed Feb. 5. Since then, Fox acquired the ad-supported streamer Tubi for $440 million in cash and sold its stake in the streaming media player Roku.

The UBS analyst forecast a "slightly worse" pay TV subscriber base for Fox, with uncertainty also surrounding its upcoming renewal talks with the NFL.