Analyst Upgrades News Corp. Stock on Value of Entertainment Units

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The conglomerate's entertainment business, to be separated from its publishing units, "alone is worth more than the current trading price," says Barclays' Anthony DiClemente.

Barclays Capital analyst Anthony DiClemente has upgraded his rating on the stock of Rupert Murdoch's News Corp. to "overweight" and raised his price target by $1 to $28.

He argued that the conglomerate's entertainment business "alone is worth more than the current trading price."

DiClemente values the entertainment business, which will become a separate company in a planned separation, at $24-$25 per share. News Corp.'s stock, which traded between $14.72 and $24.05 over the past year, closed at $23.39 on Friday before the Labor Day holiday on Monday. The analyst also values News Corp.'s publishing business at roughly $4 per share.

"News Corp.'s global cable TV networks have among the most attractive growth characteristics of any in the media space," he wrote. "Given the potential for the value of the TV assets to be highlighted by the separation of the entertainment and publishing businesses (planned for mid-year 2013), we have revisited our sum-of-the parts analysis."

DiClemente also cited several other reasons for the upgrade, including News Corp.'s "global portfolio of local/regional sports," the fact that U.S. network affiliate fees are "among the fastest growing in media" and that "international networks growth [is] also above peers."

DiClemente also highlighted that political advertising and stronger upfront pricing will benefit the conglomerate's ad trends later this year, and that management has set shareholder friendly moves, including a stock buyback program and the planned split into two companies.

Twitter: @georgszalai