BofA Securities has left its rating on Fox Corp (NASDAQ:FOXA) unchanged at Underperform and kept a $54 price target, saying the broadcaster stands to gain from advertising tied to the forthcoming FIFA World Cup but that shares are likely to trade in a narrow range as the market fixates on Fox’s pending purchase of Roku.
In advance of Fox’s fiscal fourth-quarter report, the brokerage nudged up its revenue projection to $3.64 billion from $3.59 billion while holding its EBITDA estimate steady at $984 million. BofA projects cable revenue will increase 4.8% year-over-year and forecasts television revenue to jump 17.1%, outcomes the firm attributes primarily to stronger World Cup-related ad demand and to sign-ups for Fox’s Fox One streaming service.
The broker said Fox’s mix of live sports and news programming continues to perform better than the broader linear-TV market. Still, it noted that investor attention has migrated toward the company’s announced acquisition of Roku. While BofA acknowledged that the Roku deal expands Fox’s footprint in the faster-growing connected-TV space and could create long-term revenue and cost synergies, the firm expects the stock to remain in a state of what it described as "deal limbo" until the transaction - which is expected to close in the first half of 2027 - progresses closer to completion.
On a longer-term basis, BofA raised its fiscal 2027 EBITDA forecast to $3.93 billion from $3.86 billion and increased its 2027 earnings-per-share estimate to $5.76 from $5.63, reflecting stronger assumptions for cable advertising. Despite those upward revisions, the brokerage maintained its Underperform recommendation.
BofA pointed to structural challenges as the reason for its cautious stance: Fox’s continuing exposure to the traditional linear-television ecosystem and the possibility of significantly higher costs when National Football League media rights are renegotiated. The brokerage said those elements could exert pressure on earnings beyond fiscal 2027, constraining upside for the shares.
Summary
BofA retained an Underperform rating and a $54 target on Fox, lifting near-term revenue and multi-year profit forecasts in light of World Cup advertising and streaming growth but warning that the Roku acquisition and legacy TV risks will likely limit share appreciation.
Key points
- BofA kept Fox at Underperform with a $54 price target while raising revenue to $3.64 billion for the fiscal fourth quarter and holding EBITDA at $984 million.
- The brokerage expects cable revenue to climb 4.8% year-over-year and television revenue to increase 17.1%, led by World Cup ad demand and Fox One sign-ups.
- BofA raised fiscal 2027 EBITDA to $3.93 billion and EPS to $5.76 but said ongoing exposure to linear TV and potential higher NFL rights costs could weigh on earnings beyond 2027.
Risks and uncertainties
- Investor focus on the Roku acquisition could keep Fox shares range-bound until the deal, expected to close in the first half of 2027, moves nearer to completion - affecting media and connected-TV market sentiment.
- Fox’s reliance on the traditional linear television ecosystem exposes it to structural headwinds that could limit long-term upside for the stock - impacting broadcasters and advertising markets.
- Potentially much higher costs when NFL media rights are renewed could pressure earnings beyond fiscal 2027, with implications for sports-media rights markets and broadcaster profitability.