News Corp: Near 52-Week Low Again Despite Solid FY22

(Preview) Company Update (NWSA US, NWS US) (Buy)

Summary

• News Corp shares are again near their 52-week low and down 37% in the past year, with Class A shares trading at 12.5x FY22 EPS.

• Operational performance has continued to be solid, with Q4 providing a mostly strong finish to FY22, despite investor macro concerns.

• We continue to expect EBIT to grow at mid-to-high single-digits, led by high-quality assets in Dow Jones and Digital Real Estate Services.

• News Corp's 61% stake in REA is still worth 70% of its market capitalization, leaving a 20%+ Free Cash Flow Yield for the rest.

• We believe investors can expect a 20-30% upside, either by going long News Corp or a pair trade of long News Corp, short REA.

Introduction

We review our Buy rating on News Corp after shares are again near their 52-week low.

We initiated our Buy rating on News Corp in early July. Since then Class A shares (which we preferred) are down 2%, taking them back to near their 52-week low and down 37% in the past year. (News Corp has two classes of shares with both having th…