Fox (FOXA) is likely to see strong advertising revenue growth, driven by FOX News' high ratings and strong sports demand, including the Super Bowl, UBS Securities said in a report emailed Tuesday.
Due to FOX News' significantly higher viewership than previously expected, the brokerage has raised its forecast for total ad revenue growth to 55% year-over-year, up from our previous estimate of 52%, UBS said, adding that it has also increased its Q3 earnings before interest, taxes, depreciation, and amortization projection to $776 million and expect it to reach $3.5 billion in fiscal year 2025.
While cyclical benefits from the political cycle and Super Bowl will fade in fiscal 2026, the firm believes FOX is better positioned than its competitors to maintain stable or growing long-term profits, UBS said.
FOX is seeing strong ad growth, driven by high FOX News ratings and brand advertiser demand, while cable affiliate growth slowed due to fewer renewals. Sports sublicensing boosts revenue with minimal EBITDA impact, and TV EBITDA is set to recover next quarter, the report said.
UBS has a buy rating on Fox with a price target of $63.
Shares of Fox were up more than 2% in recent Tuesday trading.
Price: 54.75, Change: +1.36, Percent Change: +2.54
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