Posted on 07/10/23
| News Source: Newsmax
A major financial services company downgraded Fox Corporation stock, citing risks concerning news, earnings, and viewership.
Wells Fargo analysts downgraded shares of Fox Corporation (NASDAQ:FOXA) to underweight from equal weight on Monday, lowering the price target to $31 from $35 per share.
"Fox News is the FOXA cash cow at ~80% of our FY24E EBITDA," the analysts said, Investing.com reported. "Viewership is down -19% Jan-June'23 vs Jan-June'21 due to cord cutting and/or programming.
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"More worryingly, Fox News was 52% of cable news primetime viewership for 2020-22, 51% in Jan'23, and that has slid to a low of 38% in June'23 post-TC. FN's share of conservative news viewers has fallen from 94% to 84%."
Fox News saw a significant ratings decline after its termination of its number one rated host Tucker Carlson.
The network has yet to reveal why it had removed Carlson from his prime time perch.
Meanwhile Newsmax has seen a significant ratings rise.
Newsmax’s total day rating rose 71% as Fox News decline 15% in the same period, according to Nielsen.
In the key prime time hours, Newsmax saw its audience grow 126% as Fox’s audience fell 21%.
Fox has also been suffering as cord-cutting has viewers canceling cable or satellite subscriptions and choosing less-expensive streaming options.
Seeking Alpha reported that analyst Steven Cahall said he believes Fox News has an enterprise value of roughly $11 billion. He values it five times EV/EBITDA, down from a previous estimate of six times due to worries of a "structural decline" in cable news viewership from cord-cutting and demographics, as well as worries about talent departure and increased competition.
"We are also not convinced that cable news works well in streaming, so our 8% view on annual cord-cutting presents ongoing earnings risks," Cahall said, Seeking Alpha reported.