Guggenheim analyst Michael Morris on Thursday slapped a buy rating on shares of Fox Corp. — a rare upgrade in a period of dislocation and dire predictions by Wall Street across media and entertainment.
Morris upped his recommendation from “neutral” – basically a hold – calling Fox the best positioned among its broadcast peers to weather the ongoing coronavirus-induced downturn.
While weaker ad spend, particularly in local markets, will continue to be an issue, Morris said, he noted – as did Deadline in a story yesterday – that exposure to live news, where ratings are soaring, and late-season sports “are relatively attractive compared with media peers.”
While CBS, ABC and NBC are taking major hits from the cancellation of March Madness and the suspensions of the NBA, NHL seasons and the Summer Olympics, along with a slew of premiere events in other sports like golf and tennis, the Fox sports schedule for the season has remained largely intact, Deadline wrote. Postseason baseball and NFL football wrapped before the outbreak hit, and WWE is a rare major sports league to continue to operate as close to normal as possible, keeping Smackdown on Fox’s schedule.
Morris did note that any indications that the NFL season will be negatively impacted would likely weigh on investor sentiment.
Morris still cut his 12-month price target on Fox to $29 from $40, reflecting the overall weaker environment.
Facing deep skepticism a year ago as to whether it could survive without an affiliated studio following the departure of 20th TV for Disney, the now-independent Fox Entertainment is emerging as one of the best positioned for the coronavirus era given a particular mix of shows and lucky breaks that resulted in it having series like Prodigal Son and The Masked Singer ready to air.
Morris also lowered his price targets for Disney, ViacomCBS, Discovery and AMC Networks. He has “buy” ratings on the first two companies and “neutral” recommendations on the second two.