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News Corp Is A 'Digital Real Estate Play Wrapped Inside A Newspaper Company'

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News Corp Is A 'Digital Real Estate Play Wrapped Inside A Newspaper Company'

Despite popular belief, News Corp (NASDAQ: NWSA) isn't a "declining newspaper company," at least according to analysts at Rosenblatt Securities. The firm's Alan Gould initiates coverage of News Corp's stock with a Buy rating and $17 price target given the disconnect between perception and reality.

Over 50 percent of News Corp's non-cash value can be found in its high-growth digital real estate portfolio, and over 60 percent of the value is digital real estate and cash, Gould said in his research report. This is consistent with the company's plan four years ago to evolve itself from the split with its former parent company Twenty-First Century Fox Inc (NASDAQ: FOXA).

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In fact, News Corp has overseen a total of 10 separate acquisitions worth more than $2.4 billion, of which two-thirds were allocated into new media, the analyst continued. In addition, the company holds more than $1.6 billion in cash which can be used for even more acquisitions in other high-growth digital real estate areas.

Meanwhile, News Corp is likely to scale back or more rationalize some of its "old media" asset properties. These actions should help the company report an annual EBITDA growth of 4 percent and an operating income growth of 10 percent which now makes the stock attractive to investors.

Bottom line, News Corp should now be viewed as a "digital real estate play wrapped inside a newspaper company."

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