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News Corp a Buy on Valuation
News Corp (NWS - Snapshot Report) has a solid global distribution platform with a clear focus on the television broadcasting and satellite sectors. The company has amassed a complementary asset mix, which underpins its ability to control both content and distribution of products. A growing presence in emerging markets, such as India and Latin America, bodes well for long-term growth and increased leverage of its largely fixed-cost base.
Hence, notwithstanding weakness in the Television division, due to lower advertising revenue, and CEO Rupert Murdoch’s flagging of less robust growth in fiscal 2009, we believe at current levels that the stock is attractive and move to a Buy recommendation.
We have valued News Corp on a forward price/earnings (P/E) basis, as well as through a comparison of similar firms in the media/entertainment sector. We believe NWS is among the most diversified operators in the sector, with significant interests in all major sub-segments (Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts, Newspapers, and Book Publishing).
Notwithstanding the currently challenging macro-economic environment, we believe the company is well positioned to exploit growth opportunities in both cable and direct broadcast satellite television, and apply a multiple of 13x FY09 EPS of $1.38 to derive a six-month target price of $18.
Read the full analyst report on NWS
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| Market Summary | Sep 05, 2010 22:00 pm ET |
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