Sterne Agee Raises Twenty-First Century Fox Price Target

Sterne Agee raised its price target on Twenty-First Century Fox Inc FOXA Monday from $40 to $43 and maintained a Buy rating.

Analyst Vasily Karasyov noted that “as we get closer to FY16 (begins July 1, 2015) we expect the debate around the guidance, whether it is doable or not, to increasingly drive the stock price.

“We believe, after 1QFY15 print, the math works for FY15 and FY16. If we are right, the stock price will have to go up; otherwise, the discount to more slowly growing peers will be too steep. Looking farther out, we see 10 percent EBITDA growth in FY17 which should support the stock after the catalyst of FY16 guidance is in the past.”

Karasyov’s analysis showed that over the past 12 months “that the relative P/E contracted 26 percent. This was due to a sequence of events, including an absence of catalysts in the months following the investor day, technical pressure due to de-listing from the Australian Stock Exchange, and estimates and guidance revisions in mid FY14. The bid for TWX actually was only a short-term drag on the P/E – the multiple fully recovered after FOXA withdrew the offer.”

The analyst report concluded that it is the “time to buy” as the “next twelve months should be different.”

Twenty-First Century Fox closed Monday at $35.75, up 1.55 percent.