Fox Corporation Is A Recovery Buy

Fox Corporation Is A Recovery Buy


Media network Fox (NASDAQ:) shares have been trying to recover since its pandemic meltdown in an attempt to recover back to its pre-COVID levels. While still vastly underperforming the benchmark , the shares are staging a recovery as live sports programming starts to resume.

Fox News Digital is setting viewership records as the November Presidential elections approach. With shares still trading down (-25%) on the year, prudent investors may look for selective entries on opportunistic pullbacks as the daily stochastic makes an oscillation move down.

Q4 FY 2020 Earnings Release

On August 4, 2020, Fox released its fourth-quarter fiscal 2020 for the quarter ending June 2020. The Company reported earnings-per-share (EPS) of $0.62 versus consensus analyst estimates for a profit of $0.57, a $0.05 per share beat.

Revenues fell (-3.8%) year-over-year (YoY) to $2.42 billion beating consensus estimates of $2.39 billion. Cable Network Programming segment saw (-2%) YoY top-line drop on lower advertising revenues partially offset by higher affiliate revenues. The Television segment saw a (-6%) decrease in YoY revenues as advertising revenues dropped (-29%) YoY. The Company declared a $0.23 per share dividend payable Oct. 7, 2020.

Conference Call Takeaways

The Company noted the pent-up demand for live sports and how FOX Sports is optimizing execution to grow efficiencies while meeting demand. NASCAR was the first major American sport to resume post-pandemic. FOX Sports adapted to minimum crews, production teams and maximum health protocols using a third of the “normal” personnel.

Incorporation of off-site production and editing teams coupled with the usage of miniature flying drones for never before seen aerial footage was widely adopted to heavy viewership traffic. In-car audio production and feature editing were produced live in technicians’ homes. The Company introduced computer generated virtual fans and enhanced crowd audio to bolster the excitement of live events where very few fans are permitted to attend due to COVID-19 safety restrictions.

Winning

The culmination of efficiency, innovation and optimization resulted in Fox regaining the title of number one broadcast network for the first time in 8 years. Fox is the only network to deliver YoY ratings gains for the 18-to-49 demographic beating out the number two network by 31%.

FOX News became the lead prime time network ahead of all broadcast networks for the month of June 2020. Record political advertising revenues helped offset some of the COVID-19 impacts in local markets. Management points out that 9 of 18 station are in lucrative presidential battleground states.

FOX News International Monthly Digital Plan

Fox News Media has launched a live digital streaming service that includes FOX News Channel and FOX Business Channel for international users at $6.99 per month. The service is aimed at international users with rollout commencing in Mexico, Spain, Germany and the U.K. and ultimately 20 countries by year-end. The platform app is available on mobile phones on iOS and Android as well as Apple TV, ROKU and Amazon Fire TV.

Digital Streaming Domination

The migration to digital and streaming is paying off for Fox Corporation. For the month of July, FOX News Digital logged 2 billion multi-platform views and over 100 million multi-platform unique visitors. This marks the 8th consecutive month of cross-platform unique visitors. July marked 12% YoY growth in views and 13% YoY growth in unique visitors.

The Fox News Mobile App beat the CNN Mobile App for the 20th straight month with 8.6 million unique visitors versus 7.5 million, respectively. FoxBusiness.com recorded a 100% YoY increase in multi-platform unique visitors for the month of July with 31.8 million driving 209 million total minutes and 131 million total views.

The upcoming Presidential elections coupled with start of the NFL season with plenty of content in the pipeline makes Fox Corporation an attractive holding for longer term investors looking to capitalize on the recovery narrative.

FOXA Opportunistic Pullback Price Levels

Using the rifle charts on the weekly and daily time frames provides a near-term precision view of the landscape for FOXA stock. The weekly rifle chart completed the channel tightening from the 5-period moving average (MA) through the 15-period MA at $26.92.

The monthly stochastic mini pup targets the upper Bollinger Bands (BBs) near the $31.00 Fibonacci (fib) level. The weekly market structure low (MSL) buy triggered above $24.82.

The daily rifle chart stochastic peaked and fell under the 80-band stochastic which can provide opportunistic pullback entry levels at the 26.73 weekly 15-period MA and fib, $25.25 fib and $24.22 fib. This is not a momentum stock so the price targets may seem conservative. The key is to utilize the daily stochastic oscillation down before the weekly stochastic resumes the upward momentum when the daily stochastic crosses back up.

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