By Georg Szalai 1 hour, 22 minutes ago
NEW YORK (Hollywood Reporter) -
News Corp. shares have been
Wall Street favorites in recent years, but in recent days a
couple of analysts have cut their rating and/or price target on
the media conglomerate's stock, citing growth concerns,
particularly at its online assets, led by MySpace.
UBS analyst Michael Morris lowered his price target by $1
to $25, highlighting "increased uncertainty." He maintained his
"buy" rating though, pointing in part to the company's strong
exposure to international markets compared with its peers.
Morris emphasized that he continues to view News Corp. as
"well-positioned to capture above-average growth opportunities
in the global media marketplace. However, recent events have
increased our uncertainty around the timing and challenges
related to this growth, particularly at Fox Interactive Media
and Sky Italia."
The Italian satellite TV platform recently used promotions
that could drag down results near-term, Morris suggested before
asking whether the promotions may be a sign of sluggish
subscriber momentum.
The UBS analyst also cut his estimates for Fox Interactive
Media after recent reports suggested the online unit will miss
its $1 billion revenue target for the fiscal year that ends
June 30.
"Forward-looking comments regarding MySpace and the
company's advertising strategy are most needed," Morris said
before also raising questions about News Corp.'s ability to
continue its strong cable networks unit growth.
In a more bearish note, Bernstein Research analyst Michael
Nathanson downgraded News Corp. shares from "outperform" to
"market perform" and cut his price target from $24 to $21.
"News Corp.'s earnings have more risk in the near-term due
to exposure to structurally weak and cyclically affected
markets," he argued in a reference to continued expectations of
a U.S. recession.
Plus, "News Corp.'s valuation is unlikely to trade at a
significant premium to S&P 500 multiples," he added.
While Nathanson signaled potential earnings shortfalls on
multiple fronts, Fox Interactive is also his biggest concern.
"As one of our key long-term profit drivers, FIM/MySpace's
inability to meet near-term consensus estimates, despite
increased usage, worries us about the accuracy of long-term
forecasts," he said.
News Corp's widely traded Class A rose 45 cents, or 2.55
percent, to $18.08 on the New York Stock Exchange Thursday, at
the lower end of their 52-week range of $23.66 to $17.28.
Reuters/Hollywood Reporter
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