Stripping out the separately-listed REA Group ((REA)), which comprises approximately half of the company’s market value, UBS estimates the market is pricing in the remaining traditional media assets at around $7.06-8.43.
The broker envisages potential upside catalysts relating to this "stub", including participation in consolidation in Australia/US following changes to cross-media ownership laws and cost reduction opportunities from the proposed merger of Foxtel/Fox Sports and a printing joint venture with Fairfax ((FXJ)).
UBS initiates coverage with a Sell rating and $20.40 target.
Target price is $20.40.Current Price is $20.96. Difference: ($0.56) – (brackets indicate current price is over target). If NWS meets the UBS target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).