Financial analysts reacted favorably to the news about FOX Sports 1 on Tuesday, with many offering "buy" or "outperform" ratings on News Corps. stock (NWS). Some highlights below:
"News Corp is uniquely positioned to launch a national sports network, and it's strong affiliate fee growth is expected to continue. We are increasing its stock price target to $33 from $31." - Barclay's
"We like the idea conceptually - leverage existing assets (sports contracts and network) for greater revenue generation by re-branding/reallocating. The launch appears to be a strong, efficient step....Rating: Buy. We have raised our target to $34 from $33." - Davenport Equity Research
"While FOX Sports 1 will likely lose money for years as it builds up audience and programming in advance of hiking affiliate fees, at scale, we see potential for the new sports network to provide a 5% lift to consolidated EPS for the soon-to-be-separate Fox Group. We are raising our News Corp. price target $4 to $35 per share." - Lazard Capital Markets
"We see meaningful affiliate fee upside for Fox Sports in the long term, primarily at Speed (to become the flagship Fox Sports 1) and Fuel (to become Fox Sports 2). We are raising our price target from A$30 to A$32 per share." - Macquarie Research
"We think FOX's transformation of Speed-TV into Fox Sports 1 is consistent with this ongoing theme of upgrading under-performing channels. The most obvious potential loser is the dominant national sports incumbent, ESPN (DIS, Hold), which should experience margin pressure. Fox will be a worthy adversary to ESPN's dominance in the sports space, in our view. Rating. We maintain our Buy rating and $34 target price." - Needham & Company
"A national sports network appears to be a natural fit in the context of big sports events on the network and regional sports on the RSNs. It could offer the opportunity to take advantage of rights, platforms, and reach. Rating: Outperfrom." - RBC Capital
"FOX Sports 1 builds News Corp's leverage for fees by adding a nearly fully-distributed cable network to its broadcast/cable portfolio." Rating: Outperform." - Wedbush Equity Research
"We are raising our price target on Buy-rated News Corporation (NWSA) to $36, following confirmation that Fox will finally embark on its national sports network. We are not modeling Fox to achieve more than 25%-30% of ESPN's $5+ monthly fees, but also believe that it is positioned ahead of the other national network entrants." - Wunderlich Securities
"We maintain our Neutral rating and $28 price target at this time. We continue to have a positive view on the [national sports network] strategy, and investments in RSNs given our bias to sports exposure. - Credit-Suisse
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