BofA double lifts Fox to Buy as Roku deal ’changes the equation’

Investing.com -- Bank of America upgraded Fox Corporation to Buy from Underperform, arguing in a note Friday that the pending acquisition of Roku has shifted the stock’s risk/reward.

Analyst Jessica Reif Ehrlich raised the price target to $85 from $54, which reflects about 10 times BofA’s updated 2028 pro forma EV/EBITDA estimate. The stock last closed at $62.21.

The deal is expected to close in early 2027, and BofA said pro forma financials are now a more appropriate valuation barometer. The bank noted that both companies enter the transaction with operating momentum.

“In addition, Fox has historically been a superb operator giving us confidence in a smooth integration,” Reif Ehrlich wrote.

The prior Underperform rating is said to have reflected the risk of an early NFL renewal and concerns about Fox’s long-term positioning as media shifts toward streaming. With the near-term NFL renewal risk largely receding until the 2029 opt-out window, BofA said the Roku deal fundamentally changes the narrative.

“By adding a scaled OS and distribution platform, Roku provides Fox with a credible path to transition its predominantly linear portfolio toward DTC, addressing the company’s most significant weakness,” the analyst said.

BofA views the $400 million cost synergy target, about 10% of the combined SG&A and corporate cost base, as highly achievable. It projects base-case revenue synergies of about $530 million, with a bull case of $1.07 billion. Together, these imply roughly $700 million in total 2028 EBITDA uplift.

“Importantly, our base case does not contemplate all revenue opportunities, creating significant upside over time,” Reif Ehrlich added.

Original Article

You May Also Be Interested In

• BofA Securities names top quantum computing stocks to watch
• BofA flags five chemical stocks amid tough Q3 earnings outlook
• Intel advances Arizona, Ohio factory projects as chip demand outlook improves