NCP/FOX upgrade in the US

  1. 5,316 Posts.
    NCP/FOX shares in the US all up over 1% despite NCP was down nearly 2% on the ASX yesterday.


    ROUNDUP Fox Entertainment posts gains on upbeat Goldman Sachs, Lehman ad views 25/04/02

    AFX News Asia - 25.04.02 05:21


    ---- by Michael Todd Pai ----
    LOS ANGELES (AFX) - News Corp Ltd unit Fox Entertainment Inc posted solid
    gains on the back of upbeat comments from analysts at both Goldman Sachs and
    Lehman Brothers, who see the media company benefiting from the anticipated
    rebound in the advertising market.
    Fox generates about 44 pct of its sales through advertising.
    Goldman Sachs upgraded the stock to its 'recommended list' with a target
    price of 30.0 usd from 'market outperform' and Lehman Brothers analyst Stuart
    Linde initiated coverage of the stock with a 'buy' rating and 30.0-usd price
    target.
    "Going into 2002, we anticipated a four percent decline in advertising
    broadly; however, we continue to feel the tone of the advertising market is
    improving and could result in flat year-on-year performance," the Goldman Sachs
    analysts said.
    "The potential to improve network ratings, the continued strength of Fox
    News ratings and the opportunities to improve the margins of the station group
    -- even with weak network ratings -- should together leverage the ad turn,"
    they said.
    "Fox is among the most vertically-integrated companies within the
    diversified media space and given its asset composition, represents a strong
    play on the advertising rebound," Linde at Lehman Brothers agreed.
    "After a volatile year, we believe Fox has reached a critical turning point
    at its key segments and, accordingly, the stock is poised to outperform. "
    Fox's television stations and production units and its cable networks will
    be the "major growth drivers" for the company, according to Linde, while the
    Goldman Sachs analysts said Fox's "growth should notably outperform its peers
    with momentum building across its businesses."
    Linde expects Fox's television station unit to "post solid recovery numbers
    as TV could outperform, given 2002 is an election year, which could tighten
    advertising inventory."
    Fox's recent success with its "Ice Age" film and strong home video releases
    also "bode well" heading into the end of Fox's full year to June, the Goldman
    Sachs analysts said.
    Fox shares deserve a premium, according to Goldman Sachs.
    A target price of 30.0 usd implies the shares would trade at the high end
    of its entertainment peers, they said.
    The company has seen its share price take a hit since the beginning of the
    year on a weak advertising environment and poor performance at its Fox
    broadcast network, but Linde believes "the stock for the most part reflects
    these concerns, which are being addressed by the company."
    "With a limited number of big deals on the horizon, we expect the company
    to stay focused on its internal growth prospects."
    The Goldman Sachs analysts expect Fox to report third-quarter EBITDA of
    309.0 mln usd, up 42 pct from a year earlier. Adjusted for its Chris-Craft
    acquisition and recent sports write-down, they see EBITDA gaining 17 pct to
    254.0 mln usd from 218.0 mln last year -- representing "one of, if not the best
    growth rates in the entertainment sector this quarter."
    They expect the company's per share performance in the third quarter to
    improve to a profit of 6 cents from a year-earlier loss of 1 cent on an
    anticipated 8 pct rise in sales to 2.125 bln usd.
    The current First Call/Thomson Financial consensus estimates call for Fox
    to report third-quarter EPS of 4 cents on sales of 2.344 bln usd.
    Both Fox and News Corp are expected to report third-quarter results during
    the second week of May.
    At 3.09 pm in New York, Fox shares rose 0.55 usd or 2.26 pct to 24.92,
    after trading as high as 25.15. News Corp ADRs added 0.36 usd or 1.32 pct to
    27.61.
    The DJIA slipped 18.82 points or around 0.2 pct to 10,070.43 and the Nasdaq
    composite eased 14.39 points or 0.83 pct to 1,715.90.
    mtp/gc

    For more information and to contact AFX: www.afxnews.com and www.afxpress.com



 
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