Wedbush Cuts Price Target on 21st Century Fox (FOXA) to $31

Wedbush maintained an Outperform rating on 21st Century Fox (NASDAQ: FOXA), and cut the price target to $31.00 (from $33.00) based on likely dilution from a SKY plc deal. On Friday, SKY and FOXA separately announced an agreement in principle on a possible deal at £10.75/$12.90 cash per SKY share, although the final deal may be at a higher price.

Analyst James Dix commented, "likely dilution from unsurprising deal for Sky plc (SKY-NR) leads us to trim our target valuation. Pullback on prospect of a deal looks largely done, as shares already incorporated some discount for prospect of M&A, given FOXA management’s flagging slower pace of share repurchases with its August results. An acquisition of SKY would actually be the least surprising allocation of capital to M&A, as opposed to capital return, given FOXA’s 39% stake and prior 2011 bid for 100% control and subsequent FOXA commentary that the 39% stake was not the natural end state. Strategic upside from vertical integration (e.g., ad targeting, bundle packaging/pricing) seems modest, but relatively low risk."

For an analyst ratings summary and ratings history on 21st Century Fox click here. For more ratings news on 21st Century Fox click here.

Shares of 21st Century Fox closed at $26.34 yesterday.

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