News Corp

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News Corp Takes Hit but Future is Glowing

News Corp (NWS) has a $33.03 share price target and an Outperform recommendation from Australian stock analyst Macquarie Research Equities.

NWS: Newscorp Sees Support at $20

News Corp (NWS) - Outperform
Current Price: $20.00
Target Price: $33.03 (~65% Upside)
P/E: 16.0 X
Div Yield: 0.5% (0% Franked)

News Corp (NWS) Technicals:

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.

Macquarie Research Equities (MRE) has reiterated their Outperform stock recommendation for News Corp (NWS) shares with a high end share price target of $36.48. The stock analysts believe that this share price target is "conservative in light of recent deals such as MySpace and plans to sell/merge Sky Italia." The stock analyst believes that the NWS shares have rebounded from 2005's disappointing performance.

Stock analysts, Macquarie Research Equities (MRE) have reiterated their stance that News Corp (NWS) stock is excellent value giving a range of a low end valuation of $30.67 and a high end valuation of $36.48 but an overall 12 month share price target of $33.58. The share price target is based on the strong growth of a number of NewsCorp divisions which could possibly drive the share price higher.