Macquarie Capital analyst Tim Nollen has upgraded his rating on the stock of Fox Corp. to “neutral” and boosted his price target by $9 to $31, citing improving advertising trends that led him to increase his financial estimates, among other things.
“The ad market is looking better than previously expected, and a return of live sports along with political ad spend in the second half of the calendar year would boost Fox,” he wrote in a Friday report. “A recovery in valuation stability post the COVID crash gives us the opportunity to reassess our view on Fox shares based on our sum of the parts analysis.”
Earlier in the week, Fox COO John Nallen had said that advertising trends were moving in a better direction after the initial freefall of the early days of the novel coronavirus pandemic.
Nollen raised his current fiscal year earnings estimate for Fox, led by executive chairman and CEO Lachlan Murdoch, from $2.31 per share to $2.40 a share on “improving underlying ad market dynamics and sports-related cost savings.”
In terms of advertising, the analyst argued: “Underlying advertising has been a bit better at the local station level, while a largely ready fall lineup sets Fox up well to capture improved network spending, especially with the upcoming political season.”
Nollen in Friday reports also raised his earnings estimates for the Walt Disney Co., ViacomCBS, Discovery and AMC Networks and raised his price targets on the stocks of ViacomCBS and AMC. He cited “improving” ad declines, “the return of live sports” and the upside for streaming services and bundles.
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