Bringing Fox And News Corp Back Together Again Scares This Analyst, Who Just Downgraded The Stock On Merger Concerns

Bringing Fox And News Corp Back Together Again Scares This Analyst, Who Just Downgraded The Stock On Merger Concerns
  • Credit Suisse analyst Douglas Mitchelson downgraded Fox Corp FOX FOXA to Neutral from Outperform with a price target of $36, down from $41
  • Rupert Murdoch weighed merging his media empire, News Corp NWSA and Fox, nearly a decade after the companies split.
  • Fox is increasingly facing a "shift to unfavorable" fiscal 2024 drivers that do not appear fully factored into consensus, including political and Super Bowl compares and the first-year Sunday NFL step-up.
  • Fox faced a growing CY23 advertising recession risk against Fox's annual $6 billion advertising.
  • Fox also faced increasing secular concerns, including cord-cutting accelerating (and 2023 perhaps worse with Sunday Ticket moving to a streamer and a potential consumer recession). 
  • Thus, the near-to-midterm investment case increasingly relied on the fair allocation of its $5 billion cash (vs. its $17 billion market cap). 
  • Price Action: FOX shares are down 6.82% at $27.17 on the last check Monday.

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