Wolfe Lifts FOX to Neutral as Sports Ads Surge and Tariff Fears Fade
Summary
Wolfe Research upgraded Fox Corporation (FOXA) to 'Peer Perform' from 'Underperform,' citing easing macroeconomic risks and a robust rebound in sports advertising. The firm noted reduced recession probabilities and a 10% year-over-year increase in upfront sports ad pricing. Fox's strong NFL exposure and potential for premium asset sales, not fully reflected in its current valuation, further support the upgrade, indicating less downside risk and better alignment with industry peers.
Wolfe Research Upgrades Fox (FOXA) to Neutral Amid Surging Sports Ad Revenue and Fading Economic Risks
New York, NY – July 9, 2025 – Wolfe Research has upgraded its rating on Fox Corporation (NASDAQ: FOXA) from 'Underperform' to 'Peer Perform,' signaling a more optimistic outlook for the media giant. The upgrade reflects a significant shift in macroeconomic conditions and a robust rebound in the sports advertising market, which are mitigating previously identified risks for FOXA.
Easing Macroeconomic Headwinds Bolster Outlook
Wolfe Research had previously expressed concerns regarding FOXA's substantial reliance on television advertising revenue, which accounts for nearly 40% of its total sales. This dependence was seen as a vulnerability, particularly in the face of past tariff threats and broader economic slowdown fears. However, the firm now notes a considerable improvement in the economic landscape, with recession probabilities having dropped to a mere 10%. This reduced macroeconomic uncertainty directly benefits advertising-dependent companies like Fox.
Sports Advertising Rebound Drives Growth
A key factor in Wolfe's revised assessment is the stronger-than-expected recovery and growth in sports advertising. Upfront sports ad pricing has seen an impressive climb of approximately 10% year-over-year. Fox's significant exposure to major sports leagues, particularly the NFL, positions it favorably to capitalize on this trend. The NFL alone is estimated to contribute up to a quarter of Fox's advertising income, providing access to large, loyal audiences and strong pricing power for both advertising slots and affiliate deals.
Strategic Assets and Valuation Potential
Beyond the advertising recovery, Wolfe Research highlights additional factors that could unlock further value for Fox shareholders. Ongoing developments in Washington and within the Murdoch empire could increase the likelihood of premium asset sales. The market, according to Wolfe, has not fully incorporated the potential upside from such strategic moves into FOXA's current valuation. The stock is presently trading at approximately 10 times its forward free cash flow, suggesting potential for re-rating as these dynamics unfold.
Conclusion: Reduced Downside Risk and Peer Alignment
Given the confluence of improving economic conditions, a strong rebound in sports advertising, and the potential for strategic asset monetization, Wolfe Research no longer views Fox Corporation as a clear underperformer relative to its industry peers. The upgrade to 'Peer Perform' indicates a more balanced risk-reward profile and an expectation that FOXA's performance will align more closely with the broader media sector.