Fox (FOXA): Evaluating Valuation Following Murdoch Family’s Potential Bid for TikTok’s U.S. Business

The last few days have been buzzing with chatter about the Murdoch family, best known as Fox’s (FOXA) power brokers, possibly joining a team of investors interested in acquiring TikTok’s U.S. business. While no deal has been finalized, even the prospect of Fox being linked to such a high-profile move is enough to get investors looking twice at the stock. It is not every week that you see a media giant potentially positioning itself closer to the heart of digital content and social media dynamics.

This renewed spotlight comes on the back of steady gains for Fox over the past year, with the stock rising an impressive 8% in the past three months and nearly 49% over the past twelve months. Despite relatively modest revenue growth and mixed signals from net income trends, the momentum has been building as Fox has navigated both legacy media challenges and the opportunities that come from strategic pivots like this possible TikTok play.

With all this swirling around, the big question remains: Does this newfound attention signal a real buying opportunity, or is the market already pricing in all the future growth Fox can deliver?

Most Popular Narrative: Fairly Valued

The most widely followed narrative sees Fox as fairly valued, with analysts’ projections and risk assumptions producing a price target almost identical to the current market price.

Analysts are assuming Fox's revenue will decrease by 0.3% annually over the next 3 years. Analysts assume that profit margins will shrink from 13.9% today to 11.4% in 3 years time.

Can Fox beat expectations and defy projected declines, or is the story already written in the numbers? One core ingredient of this valuation is a lower profit margin forecast, along with a future market multiple that is lower than most industry peers. Want to uncover what calculations and business shifts drive this closely watched price target? The full narrative spells out all the pivotal assumptions in detail.

Result: Fair Value of $60.69 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, trends such as surging demand for live news and sports or faster-than-expected digital growth could quickly shift Fox’s outlook in a more positive direction.

Find out about the key risks to this Fox narrative.

Another View: What Does Our DCF Model Say?

Looking through the lens of our SWS DCF model, Fox appears undervalued compared to its current market price. This view raises the question: are expectations too conservative, or is the market missing hidden potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fox for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Fox Narrative

If you would rather come to your own conclusions or question the consensus, you can dive into the numbers and create your own perspective in just a few minutes, and Do it your way.

A great starting point for your Fox research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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