Seaport Research Downgrades Fox Corp to Neutral
Seaport Research analyst David Joyce has downgraded Fox Corp (FOX, FOXA) to Neutral from Buy, citing typical September seasonality in the market. The analyst's decision was based on an analysis of the political and TV station landscape, focusing on where the most significant political ad spending is likely to occur.
Joyce noted that Fox Corp's business model, heavily reliant on traditional media in the U.S., is particularly impacted by political ad spending. This is due to the company's ownership of Fox News Channel and local TV stations covering 39% of the country.
While this exposure creates a healthy cyclical cash flow backdrop, Joyce acknowledged that Fox Corp shares have exceeded his previous price target of $40. He believes this may already reflect the enthusiasm surrounding political ad spending, leading him to downgrade his recommendation.
Despite the downgrade, Joyce continues to appreciate Fox Corp's consistent capital returns through stock buybacks and dividends. However, he remains skeptical about potential tuck-in or complementary acquisitions, given the company's strong balance sheet with low net leverage.
As of the last check on Monday, FOX stock was up 0.11% at $37.40.