Australia | Jun 30 2006
By Rudi Filapek-Vandyck
Rupert Murdoch’s presentation to local analysts and professional investors has not lacked effect. Yesterday, the share price went up. Today Macquarie has raised its price target by $2 to $32 adding there is at least $1 more upside in the offing.
As is usually the case when it comes to the myriad of media operations under the News Corp banner, reasons for added value and share price outperformance are plentiful. Macquarie names a few: finally the odds are in favour for a deal with John Malone, one that doesn’t make News Corp shareholders bleed; earnings at the film division remain strong; News Corp’s TV operations continue to perform well; the company may well see inclusion in the S&P/ASX200 index (again); and let’s not forget ongoing capital management initiatives.
Murdoch’s guidance for the year has actually driven Macquarie analysts to slice their forecasts, but nothing will temper their enthusiasm.
They have taken the opportunity to "roll forward" their valuation onto 2007 earnings estimates and as a result News Corp’s valuation now falls between $29.17 and $34.49, depending on discounts applied to the likes of BSkyB and DirecTV.
Credit Suisse currently has a $35 target on the shares.
Out of the nine leading experts in the FN Arena database that cover the stock, eight rate it a Buy, with only JP Morgan sticking to Neutral.
News Corp shares closed at $27.42 in Australia yesterday.