News Corp

Submitted by Craig Strzelecki on 10 May, 2007 - 20:58

News Corp has a maintained Buy 1 broker call and a share price target of US$27 from sharemarket analyst UBS. The Company Delivers Fiscal 3Q Results Consistent with their Buy 1 Thesis: Film Leads Quarter of Record Operating Income Performance: Revenue of $7.5 billion was 9% ahead of our $6.9 billion estimate and operating income of $1.24 billion was 2.4% ahead of our $1.20 billion estimate. Film drove most outperformance, though Cable, Sky Italia and MySpace were also strong. Operating income was negatively impacted by a $55 million loss that is expected to be non-recurring. Key Growth Segments Delivered Strong Results: They believe that News Corp have the digital assets in place to drive growth while competitors are building. $135 million in Fox Interactive revenue met our estimate and is ahead of $500 million annual guidance. Sky Italia saw its strongest subscriber growth in a year; Cable Nets op inc grew 34% led by higher affiliate fees. Dow Jones Bid Remains a Focus: A potential Dow Jones transaction has weighed on the shares. We estimate about $0.06 of FY08 dilution should the deal be completed. They believe that the DJ assets are complementary and could provide opportunities though an agreement is appearing less likely. UBS Publishing analyst Brian Shipman estimates completion at about 40%. They maintain their Buy 1, $27 price target as News trades at attractive valuation (9.7x CY07 OIBDA vs. 10.0x industry average) with higher growth (10.5% CY08 OIBDA growth vs. 8.7% average) and a key catalyst (16% share repurchase through Liberty/DTV transaction expected by 09/0). DCF based using 8.9% WACC, 3.5% growth.

News Corporation Limited is listed on the Australian Stock Exchange (ASX) under stock code NWS. In November 2004, The News Corporation Limited underwent a reorganisation and redomiciled in the United States. That company's securities ceased trading under the ASX codes NCP and NCPDP on 3 November 2004 and commenced trading the following day as an American company under the new name News Corporation, Inc. Securities based on those American shares still trade on ASX, as Chess Depository Interests under the codes NWS and NWSLV. For any announcement in relation to the former Australian company (The News Corporation Limited) please use the code NCP. For any subsequent announcement by the American-based News Corporation, Inc. please use the code NWS. You can view their investor website here.NWS was listed on the ASX on 4 November, 2004. News Corporation is a Diversified international media and entertainment company. Rupert Murdoch is the appointed Chairman, Director, Managing Director. Read previous stock recommendation for News Corporation (NWS).Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!