News Corp (ASX: NWS) shares have faced headwinds in 2025, falling approximately 5% in that span.
Notably, the stock price is down 9% since October 1.
The company is a diversified global media conglomerate with a significant presence in the US, the UK, and Australian markets.
Its key newspaper mastheads include The Wall Street Journal, The Times, and the Daily Telegraph and Herald Sun.
Last week, the News Corp share price jumped 4% on positive Q1 news.
The Motley Fool's Kevin Gandiya reported that revenue rose 2% to US$2.14 billion, and Total Segment EBITDA increased 5% to US$340 million, driven by gains at Dow Jones and Digital Real Estate Services.
Adjusted earnings per share climbed to US$0.22, up 10% year-on-year.
This week, the team at Macquarie issued a new report covering the Q1 results.
Neutral rating for News Corp shares
Macquarie has a neutral rating on News Corp shares.
It also has a 12 month price target of $50.50.
From last week's closing price of approximately $46.66, this indicates a modest upside of 8.23%.
The broker was optimistic about the reported first-quarter FY26 segment EBITDA of US$340 million, up 5% year-on-year and 3% above consensus.
The broker said the result was driven by stronger-than-expected margins in the News Media division and lower corporate costs, partially offset by a weaker book publishing performance, which included a US$13 million write-off of a customer receivable.
The News Media division delivered a 5.5% margin, an improvement of 2.2 percentage points year-on-year and around 2 percentage points above estimates.
Management attributed the strength to cost efficiencies and price increases in both Australia and the UK.
However, the broker also noted that News Corp's valuation is reliant on REA (61% stake) and its share price has dropped around 17% since August.
It said some key concerns are Domain and AI and the potential impacts are unclear.
Overall, we see the underlying business trading 4x EV/EBITDA (MQe = 6x valuation).
We cut TPs of NWSA US/NWS AU by 12%/13% to US$28.80/ A$50.50, with the marking of the 61% stake in REA at spot the main contributor (10%pts).
