21st Century Fox (FOXA) will need to show its investors that its strategies are working as the presidential election nears, but management turmoil may create some near-term overhang.
"Advertising is also doing well at the present time give heightened viewing levels at Fox News, although we are mindful that the network will undoubtedly be going through some form of a transition in years ahead given recent managerial changes," Pivotal Research analyst Brian Wieser wrote in a note to clients. Wieser rates Fox shares buy with a $38 price target.
Despite strong advertising figures because of heightened viewership due to the election, there are concerns about management transition due to Roger Ailes stepping down at Fox News may cause a transition in the coming years. "Other concerns around margin pressures, managerial changes at the film studio and relative weakness at the broadcast network are evident," Wieser added.
The company's film segment will also come under scrutiny when it reports fiscal first-quarter results on November 2, especially in light of the strong performance from Deadpool in the calendar first quarter.
The Ryan Reynolds-led movie generated $782.6 million at the global box office, thanks to strong reviews, but the company's summer-movie slate was unable to live up to those results. Movies like Ice Age: Collision Course and Independence Day: Resurgence (released domestically on June 24) have been seen as both critical and commercial missteps. Both films grossed the least amount of money in their respective franchises and Independence Day: Resurgence will likely have to look to digital, DVD and home media sales to turn a profit, after generating ticket sales of just $386 million on a budget of $165 million.