News Soars To Record Price
The Age
Tuesday February 1, 2000
An exceedingly bullish broker's report from News Corporation's house broker Merrill Lynch pushed the stock into record territory yesterday and added $5.3billion to the company's market value.
The Merrill Lynch analyst Ms Jessica Reif Cohen predicted News's American depositary receipts (each of which is worth four ordinary shares) would hit $US65 ($A102) each within a year, pricing the shares at $25 each.
She also expected those shares to be worth up to $31 each by 2001.
The report pushed the company's ordinary shares to a record high of $18.90 before they closed 8.5per cent, or $1.45 higher, at $18.45, below the previous record closing price. The non-voting preferred shares rose by $1.13 to close at $16.16.
Ms Reif Cohen said News deserved to be valued higher as a number of assets should be spun off separately in the next year and its extensive satellite assets were undervalued.
Despite being bullish on the company's future, Ms Reif Cohen expected the company's second-quarter earnings to fall 8per cent to $US513 million after the film Anna and the King failed at the box office.
But if that was excluded, News's earnings should increase by 39per cent, boosted by higher earnings from its TV division, cable networks and print media, she said.
Her report, which some analysts said overvalued the company's shares, said News had ``remarkable hidden value".
Ms Reif Cohen noted the success of the listings of the company's NDS Group and Fox Kids Europe, and expected similar moves at News's satellite platforms in Asia, Latin America and Europe.
She also said that, as the valuation of satellite subscribers rose and new services were offered, ``we believe there is a strong argument to be made that News Corp's satellite assets are markedly undervalued and worthy of significantly higher valuation".
© 2000 The Age