News Corp shares surged by over 4 per cent on Wednesday following an upgrade from broker Jarden, who moved the media conglomerate from “overweight” to “buy”. The upgrade comes after recent weakness in News Corp’s share price linked to concerns about artificial intelligence. News Corp is a global media and information services company providing content and services to consumers and businesses. Its diverse portfolio includes newspapers, information services, and digital real estate.
Jarden analyst Tom Beadle noted that the recent AI-related share price dip had created a more favourable entry point, improving the overall risk-reward profile for investors. He emphasized that News Corp offers significant exposure to REA Group, which constitutes approximately 61 to 68 per cent of News Corp’s total market value, while the remaining assets appear significantly undervalued by the market.
Beadle believes the market is undervaluing key assets such as Dow Jones and News Corp’s exclusive data and real-time content. He views these assets as a defensive measure against potential AI-related threats. Jarden also highlighted potential benefits from future AI partnerships, including the existing five-year, US$250 million agreement with OpenAI signed in May 2024. The broker increased its earnings forecasts for fiscal years 2026 and 2027 by 4.6 per cent and 7.4 per cent, respectively, with approximately two-thirds of the upgrade attributed to a stronger Australian dollar.
Jarden reduced its valuation for News Corp by 4 per cent to $46.80, reflecting an approximate 10 per cent decrease in its REA Group valuation. However, it said that this reduction was more than offset by the potential upside in the rest of the company’s business segments. At current market prices, Jarden estimates the market is valuing News Corp’s non-REA assets at only 32 to 39 per cent of the company’s total market value, significantly below Jarden’s own estimate. This suggests a potential upside of over 50 per cent for those assets, with an inferred 12-month total shareholder return of around 25 per cent, supporting the upgrade to “buy”. Shares in News Corp closed up 4.2 per cent.
