News Corp's Steady Buy Rating Amid REA Group's Bold Moves
Loop Capital Maintains Buy Rating for News Corp
Loop Capital continues to show its support for News Corp (NASDAQ: NWSA) by keeping a Buy rating while setting a consistent price target of $39.00. This decision is influenced by REA Group's recent efforts to increase its bid for the UK-based Rightmove plc, valued at 770 pence per share, amounting to approximately $8.1 billion. Such a move would solidify REA's position as a top player in the digital real estate landscape in both Australia and the UK.
REA Group's Impact on News Corp's Valuation
The REA Group, closely connected with News Corp, experienced a slight dip in share value, falling 2% to A$195 after previously peaking at A$220 in late August. However, Loop Capital believes that despite this decline, the acquisition of Rightmove could bring about minor advantages to REA’s financial performance, even before factoring in any additional synergies that may arise from the merger.
Share Price Sensitivities
Analysts have noted a vital correlation between the stock movements of REA and News Corp. For every A$1 fluctuation in REA's share price, News Corp's value is estimated to change by about $0.12, factoring a 25% discount on the REA shares when integrated within the overall valuation of News Corp.
Anticipated Developments in News Corp's Business
Market observers are keeping a keen eye on the potential sale of News Corp's Foxtel division. While details regarding the buyer and the specifics of the sale remain undisclosed, the anticipation is high for forthcoming announcements that could shape the company’s future.
Continued Confidence in Digital Ventures
Loop Capital's reaffirmation of the Buy rating emphasizes a strong belief in News Corp's strategic direction within the digital real estate sector. The recent steps taken, particularly the focus on enhancing their portfolio through acquisitions, indicate robust potential for value creation.
News Corp's Financial Performance and Stock Repurchase Plans
In other significant news, News Corporation reported a remarkable 6% surge in Q4 revenues, accumulating about $2.6 billion, alongside an 11% uptick in profitability, reaching $380 million. The firm is also actively pursuing a substantial $1 billion stock repurchase program, which includes buying back both Class A and Class B common stocks.
Expanding Digital Real Estate Business
Through its subsidiary, REA Group Ltd, News Corp has tabled a non-binding proposal to acquire Rightmove plc, seeking to enhance its footprint in the digital real estate market. Although the proposal is still under negotiation with no formal agreements yet, its implications could greatly benefit News Corp’s digital ventures.
Analyst Recommendations
Furthermore, on the analyst front, while Loop Capital has affirmed its stock price target at $39.00 reflecting continued optimism, Morgan Stanley slightly revised its forecast upwards, setting a new price target of $35.00. However, this comes with reduced earnings per share expectations, indicating a need for cautious optimism in the ever-evolving market landscape.
Frequently Asked Questions
What is Loop Capital's rating for News Corp?
Loop Capital has maintained a Buy rating for News Corp with a price target of $39.00.
How has REA Group's stock performance impacted News Corp?
For every A$1 change in REA's stock price, News Corp's price is estimated to move by $0.12.
What significant financial results did News Corp recently report?
The company reported a 6% increase in Q4 revenue and an 11% rise in profitability.
What are the implications of REA's bid for Rightmove?
REA's bid aims to enhance its presence in the digital real estate sector, which could benefit News Corp strategically.
What is the status of News Corp's stock repurchase program?
News Corp is actively pursuing a $1 billion stock repurchase program to buy back its common stocks.
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