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21st Century Fox Is Valued At A Lower Multiple Than Just About Every Media Company

21st Century Fox Is Valued At A Lower Multiple Than Just About Every Media Company
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Twenty-First Century Fox Inc (NASDAQ: FOXA) reported mixed results for Q3. Bernstein’s Todd Juenger maintained an Outperform rating for the company, with a price target of $35.

21st Century Fox reported its FQ3 operating income ahead of expectations, driven mostly by Film and a little by Cable Networks, while TV missed. This enabled the company to beat net adjusted OIBDA expectations and meet EPS. Domestic affiliate fees grew 7 percent, which “might be viewed as a little light, although we're talking fractions of a percent,” analyst Todd Juenger said.

What The Near Future Holds In Store

21st Century Fox’s OIBDA is now up 4 percent year-over-year FY-to-date. If the company is able to meet the Bernstein forecast for FQ4, total FY16 OIBDA would be up 5 percent year-over-year, above the guidance of flat to low single digit growth, Juenger mentioned. He pointed out the company had not exceeded guidance for a long time.

Related Link: Goldman Raises Time Warner's Target To $87, Lowers Warner Bros. And Turner Estimates

The analyst believes there would be a significant inflection of growth in FY17. The consensus expectation for two-year EBITDA CAGR is at 9 percent.

The analyst highlighted the fact that 21st Century Fox’s valuation was lower than that of Walt Disney Co (NYSE: DIS), Time Warner Inc (NYSE: TWX), Discovery Communications Inc. (NASDAQ: DISCA), CBS Corporation (NYSE: CBS) and Scripps Networks Interactive, Inc. (NASDAQ: SNI) – “essentially all the core U.S. Media stocks” with the exception of Viacom, Inc. (NASDAQ: VIAB) and AMC Networks Inc (NASDAQ: AMCX).

“While Fox carries gross leverage of 3x, net leverage is about a turn lower (maybe all that excess cash isn't such a bad thing after all). Finally, Fox has unique assets like Star India which are in a unique operating environment and state of development,” Juenger added.

Latest Ratings for FOXA

Aug 2017PiperJaffrayInitiates Coverage OnOverweight
Jul 2017OTR GlobalDowngradesPositiveMixed
May 2017RosenblattUpgradesNeutralBuy

View More Analyst Ratings for FOXA
View the Latest Analyst Ratings

Posted-In: Bernstein Todd JuengerAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga


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