News Corporation (ASX: NWS) shares are looking like a good buy according to UBS, following a strong third-quarter result.
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Revenues up across the board
The media company said in a statement to the ASX on Friday that revenues for the quarter were up 9% to US$2.19 billion, while net income was US$121 million, up 13%.
The company posted strong results across the board, however, a standout was News' stake in realestate.com.au owner REA Group Ltd (ASX: REA), which grew revenues 20% to US$325 million.
News Corp Chief Executive Officer Robert Thomson said the company was on track for a strong full-year result.
News Corp has again delivered resounding results this quarter, and we remain on track for another year of record profitability given the strength seen thus far in the fourth quarter. The third quarter was compelling evidence of the transformation of our business, and demonstrated the robustness of our core growth engines, which we expect will propel us towards a strong fiscal finish. Given our firm belief that the current share price does not reflect the intrinsic value of the company or its prospects, we have continued to execute our enhanced buyback program at an accelerated rate.
Mr Thomson said the company was well-placed with regard to the challenge of artificial intelligence (AI), and had been proactive on that front.
He added:
We are an AI inputs company and that fact was reflected in our recent deal with Meta, which complements our partnership with OpenAI. We are in discussions with other companies who recognize the preciousness of provenance, and these potential deals should have a positive impact on our revenue and profitability. We are also tracking a number of dodgy digital firms scraping illicitly, illegally our precious content and shamelessly reselling this purloined property. We have these baleful bad-boy bots in our sights and intend to pursue them vigorously. And we believe companies that willingly buy this stolen content from these nefarious fences are also culpable.
Breaking the result down by division, Dow Jones grew revenue 8%, digital real estate services 17%, book publishing 8%, and news media 5%.
Shares looking cheap
UBS said in a note to clients on Friday morning that overall, it was a strong third-quarter result, with the company beating expectations on revenue across all segments, "with Risk and Energy continuing to be the main drivers of growth and likely benefiting from recent geopolitical conflicts''.
UBS has a price target of $56 on News Corp shares compared with $42.90 currently, up 1.9% on the day.
