Analyst: Buy News Corp. Shares Now!
Nomura's Michael Nathanson predicts that several catalysts will lift the underperforming stock as the year unfolds.
NEW YORK - Buy News Corp. shares before they start rising!
That was the message from Nomura Securities analyst Michael Nathanson in a report Friday that called News Corp. his "top 2011 media idea."
The Wall Street observer also raised his target price on the stock to $20 from $18.50.
News Corp.'s stock last year underperformed its entertainment conglomerate peers amid such concerns as sluggishness at MySpace, the company's print media assets and a bid for full control of U.K. satellite TV operator BSkyB. And while some big name peers have early this year set new highs, News Corp. shares have stayed below their 52-week high. The stock closed down slightly on Friday at $15.94.
"Investors should be buying News Corp. on any weakness as we anticipate these levels present an attractive entry point before a number of catalysts emerge over the year," Nathanson wrote. "The growth of cable networks is being hurt by tough compares at the other divisions, which should subside by the end of the March quarter."
Investors have had various headaches related to News Corp.
"Lower fiscal second-quarter estimates, very difficult fiscal third-quarter film comparisons [due to last year's success of Avatar] and the performance of American Idol will dominate short-term concerns," the analyst acknowledged, only to urge investors: "Buy on any weakness with multiple catalysts ahead."
He argued that upside at the cable networks unit could help offset any potential near-term film weakness. And he predicted that losses at MySpace will be reduced "either organically or through disposition, which will also improve overall profit growth."
Lastly, coming clarity about News’ potential acquisition of BSkyB should also benefit the stock, he said.