Twenty-First Century Fox 'Starting To Fire On All Cylinders,' Credit Suisse Says

Credit Suisse’s Omar Sheikh expressed increased confidence in the long-term growth of STAR India and Hulu, given the recent robust operating trends at both of Twenty-First Century Fox Inc FOXA's businesses.

Sheikh reiterated an Outperform rating on Twenty-First Century Fox, with a price target of $37.

STAR India

“Feedback from recent meetings with Indian media companies suggest TV advertising revenues are growing 15-20 percent y/y,” the analyst stated.

Given that advertising accounts for 60 percent of STAR India’s revenues, Sheikh believes that there could be upside to the 2016 EBITDA forecasts.

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Hulu

According to the Credit Suisse report, “The near doubling of Hulu's content investment since 2014 appears to be paying off.”

Sheikh expects the daily usage minutes to have grown more than 40 percent year on year in the March quarter, reflecting robust subscriber growth and increased engagement with originals.

The analyst continues to expect Hulu to achieve 40 million subscribers by 2020, and generate EBIT of $1.4 billion.

EPS Growth

“We continue to expect a significant acceleration in EPS growth in '17 vs '16, driven by $1.1bn growth in EBITDA,” Sheikh said, while adding that 30 percent EPS growth might now be within reach for the company.

The EPS estimate for 2016 has been raised 2 percent to $1.79, to reflect the renewed commercial success of the Filmed Entertainment business.