On Monday, Loop Capital has increased its price target on News Corp. (NASDAQ:NWSA) shares to $41.00, up from the previous target of $39.00, while maintaining a Buy rating on the stock. The firm cites positive data from REA and book publishing as key drivers for the optimistic outlook on the media conglomerate.
News Corp's performance has been noted as particularly attractive within Loop Capital's coverage universe, with the company's real estate and book publishing sectors showing robust results. There was a significant increase in new listings in Sydney and Melbourne during the quarter, building on strong results from the previous September quarter. Moreover, industry consumer book revenue saw a substantial rise in July and August.
The recent bid by News Corp's majority-owned division, REA, for Rightmove (OTC:RTMVY) (RMV-LON) and the subsequent withdrawal from the potential deal has impacted News Corp's stock price. Despite approaching all-time highs, News Corp shares did not rebound in the same manner as REA's did once the bid was retracted.
Loop Capital also anticipates an update on the potential external interest in Foxtel. News Corp is scheduled to report its September quarter earnings, which marks the beginning of its fiscal year, after the market closes on Thursday.
The adjustment in the stock price target is partly due to the revaluation of REA within News Corp at a 25% discount to market to account for taxes. Furthermore, the firm's analysis suggests that excluding REA, News Corp should be trading at 12 times EBITDA, given that Dow Jones represents a significant portion of the EBITDA and peers are trading at much higher multiples.
Loop Capital has slightly raised its book publishing estimates and reiterates its Buy rating, with the new price target reflecting nearly a 50% potential gain in share price.
In other recent news, News Corporation continues to progress in its $1 billion stock repurchase program, as disclosed in several filings with the Securities and Exchange Commission. The company's Q4 revenue has seen a 6% increase, reaching approximately $2.6 billion, with profitability rising by 11%, amounting to $380 million.
In line with this, News Corp's subsidiary, REA Group Ltd, has withdrawn its potential offer for UK-based Rightmove plc. However, REA Group Ltd issued a revised non-binding proposal to acquire all share capital of Rightmove plc, indicating News Corp's strategic interest in the digital real estate sector. These are among the recent developments that shed light on News Corp's strategic financial decisions.
Analysts from Morgan Stanley have provided insights on News Corp's financial prospects, maintaining a positive outlook, upgrading its target. These observations reflect the company's potential growth areas and its commitment to enhancing shareholder value.
InvestingPro Insights
Recent data from InvestingPro adds depth to Loop Capital's optimistic outlook on News Corp (NASDAQ:NWSA). The company's market capitalization stands at $15.87 billion, with a price-to-earnings ratio of 62.49, indicating investor confidence in future growth. This aligns with Loop Capital's increased price target and Buy rating.
InvestingPro data shows News Corp's revenue growth at 2.09% over the last twelve months, with a more impressive 5.92% growth in the most recent quarter. This supports Loop Capital's observations about positive performance in real estate and book publishing sectors. The company's gross profit margin of 50.41% suggests strong pricing power and efficient operations.
InvestingPro Tips highlight that News Corp has raised its dividend for 2 consecutive years, which may appeal to income-focused investors. Additionally, the company's stock price has outperformed the S&P 500 in the past year, with a one-year price total return of 25.53%, reinforcing Loop Capital's positive stance.
For readers seeking more comprehensive analysis, InvestingPro offers 15 additional tips for News Corp, providing a deeper understanding of the company's financial health and market position.
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