TLDR
- Wells Fargo and J.P. Morgan elevated Fox Corp to Overweight, establishing new price targets at $80 and $82 respectively
- Fourth-quarter television segment revenue surged 45% annually to $2.48 billion, while EBITDA soared 129% to $705 million
- Tubi reached 110 million monthly active users with revenue growth of 35% and a 17% increase in viewing hours
- The proposed Roku merger would establish the dominant player in free ad-supported streaming television
- Wells Fargo projects the Roku combination could unlock $300 million in advertising synergies over a two-year period
Shares of Fox Corp experienced a significant boost on Friday, climbing approximately 4% to near $65.45, following consecutive upgrades from two prominent Wall Street financial institutions.
Wells Fargo elevated its price objective to $80 from $65, while J.P. Morgan increased its target to $82 from $70. Both investment banks shifted their ratings on Fox to Overweight from previously Neutral positions.
Following Fox’s fourth-quarter earnings report, J.P. Morgan enhanced its adjusted EBITDA projections for fiscal years 2027 and 2028 by 7% and 9% respectively. The financial institution highlighted favorable FIFA World Cup revenue dynamics, promising political advertising trends, and sustained advertising strength as primary growth catalysts.
The television division delivered fourth-quarter revenue of $2.48 billion, marking a 45% year-over-year increase. The segment’s EBITDA experienced an impressive 129% surge to $705 million.
The company’s streaming platform Tubi demonstrated robust performance as well. Revenue expanded by 35%, supported by a 17% boost in total viewing hours. Tubi concluded fiscal 2026 with a user base of 110 million monthly active participants.
FIFA Tournament and Campaign Spending Drive Projections
J.P. Morgan enhanced its television segment EBITDA forecast for fiscal 2027 by 30%, establishing a new estimate of $1.49 billion. The financial firm identified the forthcoming 2026 FIFA World Cup and an anticipated record-breaking political advertising season as primary revenue accelerators.
Fox management also announced it would not pursue premature discussions to restructure its NFL broadcasting rights agreement. J.P. Morgan interpreted this decision as eliminating a significant near-term uncertainty and reinforcing the company’s strategic negotiating stance.
Wells Fargo revised its fiscal 2027 EBITDA projection upward to $4.12 billion from $3.85 billion. The bank now anticipates World Cup-related revenue approaching $800 million, exceeding its previous forecast of over $600 million. Its television segment EBITDA estimate for fiscal 2027 increased to $1.6 billion from $1.3 billion.
Roku Merger Strengthens Investment Thesis
The anticipated Roku acquisition represents a substantial component of the enhanced analyst outlook. Merging Tubi with The Roku Channel would establish the preeminent free ad-supported streaming television platform in the industry.
J.P. Morgan indicated the transaction enhances Fox’s expansion trajectory and alleviates concerns regarding long-term valuation multiples. Roku currently maintains more than 100 million streaming households, providing Fox with an expanded audience for advertising distribution.
Wells Fargo projects the merger could produce approximately $300 million in advertising revenue synergies over roughly two years. These benefits would stem from enhanced pricing power, increased fill rates for Roku Channel inventory, homescreen promotional opportunities, and superior monetization of third-party streaming assets.
J.P. Morgan observed that Fox currently trades at 6.8 times enterprise value to EBITDA based on its revised fiscal 2028 forecast, below the recent benchmark of approximately 8 times. The bank anticipates potential multiple expansion as the investment community increasingly recognizes the combined entity as a scaled connected-TV platform.
According to InvestingPro data, five analysts have increased their earnings forecasts for the company’s upcoming reporting period.
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