Where Is News Corp Stock Headed After Growing 29% In The Past Year?

[Note: News Corp Fiscal Year Ends in June]

After a 29% rise over the last twelve months, at the current price of around $23 per share, we believe News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company, is fairly priced. NWSA stock grew from around $18 to $23 over the last twelve months, slightly outperforming the broader indices, with the S&P also rising about 24% over the same period. News Corp’s revenues grew marginally year-over-year (y-o-y) to $2.5 billion while its profitability declined 30% y-o-y to 5 cents in the first quarter of FY 2024. The results were driven by slightly higher consumer and subscription revenues offset by lower advertising and real estate revenues over this period. Segment-wise, NWSA’s Digital Real Estate saw the largest dip and was down 4% y-o-y in Q1, driven by weak conditions for the group’s U.S. real-estate listings play, Move (which operates realtor.com). Higher mortgage rates kept the U.S. housing transaction volumes under pressure compared to a strong bounce in listing activity in the key markets of the Australian Real Estate Market. On the other hand, Book Publishing saw the highest gains with its revenues up 8% y-o-y in Q1, due to better comparison compared to last year’s impact of Amazon’s reset of its inventory levels and rightsizing of its warehouse footprint. It should be noted that the reported growth rate in Book Publishing probably does not reflect the underlying trends in the segment.

Going forward, NWSA expects higher costs due to the supply chain and inflationary pressures. Advertising conditions and visibility remain limited across businesses. Looking at each of the segments, Australian residential new buy listings for October grew 16% as it lapped tougher prior-year comparisons at Digital Real Estate Services. At Move, the company continues to expect lead and transaction volumes to be challenged in the short term. At Dow Jones, the segment is expected to benefit from stronger growth in B2B revenues with continued improvement in ongoing advertising declines. At News Media, inflationary cost pressures, especially on newsprint prices, are expected to be balanced by targeted cost initiatives.

We forecast News Corp’s Revenues to be $10.1 billion for the fiscal year 2024, up 2% y-o-y. Looking at the bottom line, we now forecast earnings per share to come in at 72 cents. Given the changes to our revenues and EPS forecast, we have revised News Corp’s Valuation to $24 per share, based on a $0.72 expected EPS and a 33.2x P/E multiple for the fiscal year 2024 – almost in line with the current market price. That said, the company’s stock appears appropriately priced at the current price.

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