Rupert Murdoch's News Corp.: Analyst Sees Stock as Buying Opportunity
Susquehanna analyst Vasily Karasyov has upgraded his rating on the shares of the entertainment conglomerate with a $20 price target.
NEW YORK - Is this the time to invest in Rupert Murdoch's News Corp.?
Susquehanna Financial analyst Vasily Karasyov thinks so. The analyst on Tuesday upgraded his rating on the stock of the entertainment conglomerate to "positive" from "neutral" with a $20 price target and downside risk of $14.
The stock closed the day slightly higher at $16.41, still below its high of $18.35, set before the phone hacking scandal reignited this summer.
Following a recent pullback in the stock, "here is the entry point we were looking for," Karasyov wrote in a report. "Although we acknowledge that elevated market volatility is likely to weigh on the multiple in the next several months, our analysis shows that the favorable operating income growth structure implies share price of $20 within 12 months." High volatility is likely to limit upside in the next few months, but that "should give way to multiple expansion by mid-2012," the analyst argued.
Karasyov explained that News Corp. shares "have performed well historically" when operating profitability growth was concentrated in no more than two business segments. "We expect cable networks and the absence of MySpace losses to drive the majority of growth in fiscal year 2012," he said.
Last month, Evercore Partners analyst Alan Gould picked News Corp., just behind Viacom, as a favorite entertainment stock in a difficult market. Some analysts have said that while the phone hacking scandal provides some near-term risks, it could also provide a silver lining for investors and lead to corporate governance changes at News Corp. over time.
A U.K. hedge fund has also recently bought News Corp. shares in a sign that it expects upside for the stock.