Brean Capital Remains Sidelined on 21st Century Fox (FOXA) Following 10-K Release
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Brean Capital maintained a Hold rating on 21st Century Fox (NASDAQ: FOXA) following the company's recently released 10-K. Fox News is at 91 million subscribers, down from 94 million in FY15 and 99 million in FY14. Sports Programming Commitments increased to $57 billion, up from $49 billion last year, and exceeds Disney's (DIS) $53 billion. Management is fulfilling its commitment to finish its $5 billion buyback from last year, then repurchases are expected to moderate dramatically. Brean is projecting only $1 billion of buybacks for the fiscal year.
Analyst Alan Gould commented, "While we like FOX shares more now that consensus estimates have come down and f/x should be less of a headwind this year (notwithstanding the translation of Sky earnings), we still prefer TWX ($80.55 Buy) and CBS ($52.35 Buy), which we believe are growing quicker and CBS is trading at a lower multiple (due to the potential VIA $42.91, Buy acquisition fear). Our fair value estimate on FOX is $31, a 30% discount to our private market value estimate, or about 15.5x our CY17 EPS estimate of $2.02. Fox continues to trade at the largest discount to estimated private market value in the group."
Shares of 21st Century Fox closed at $26.02 yesterday.
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