What’s Next For News Corp Stock?

[Note: News Corp Fiscal 2024 Ended in June]

After an 8% rise year-to-date, at the current price of around $26 per share, we believe News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company, could see further gains in the longer term. NWSA stock grew from around $25 to $26 during this period, underperforming the broader indices, with the S&P rising about 20% over the same time. For the full year 2024, News Corp’s revenues grew 2% year-over-year (y-o-y) to $10 billion while its adjusted profitability grew 43% y-o-y to 70 cents. The results were driven by higher Australian residential revenues at REA Group, improved digital sales at the Book Publishing segment, and continued growth in the professional information business at the Dow Jones segment. The results were partly offset by lower advertising revenues in the News Media segment and lower revenues at Move due to ongoing challenging housing market conditions in the U.S.

The company’s segment-wise review presents a largely optimistic picture, albeit with notable exceptions in two operating segments that are exhibiting declining trends: Subscription Video Services (revenue down 1%, EBITDA down 11%) and News Media segment (revenue down 4%, EBITDA down 23%). In the Subscription Video Services segment, higher costs related to Hubbl’s launch and escalated sports programming rights expenses, resulting from contractual rate increases, contributed to the decline in profitability. The news media businesses face ongoing print challenges and transition to digital platforms, particularly in the News Corp Australia division.

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 July grew 12% as it lapped tougher prior-year comparisons at Digital Real Estate Services. REA’s fiscal 2025 prospects have been bolstered by the successful implementation of a 10% price increase for Premier Plus. The company’s y-o-y growth trajectory is anticipated to benefit from strong prior-year listing volumes, driven primarily by the Melbourne and Sydney markets. At Dow Jones, the segment is expected to benefit from stronger growth in B2B revenues with the rate of expenses to be moderately higher due to investment in upselling and new products.

We forecast News Corp’s Revenues to be $10.4 billion for the fiscal year 2025, up 3% y-o-y. Looking at the bottom line, we now forecast earnings per share to be 87 cents. Given the changes to our revenues and EPS forecast, we have revised News Corp’s Valuation to $30 per share, based on a $0.87 expected EPS and a 34.4x P/E multiple for the fiscal year 2025 – 15% higher than the current market price. That said, the company’s stock appears cheap at the current price.

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