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Zacks Analyst Blog Highlights: News Corp., Dow Jones & Company, and VeraSun Energy

Posted on: Thursday, 3 May 2007, 06:00 CDT

Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: News Corp. (NYSE: NWS), Dow Jones & Company (NYSE: DJ) and VeraSun Energy (NYSE: VSE).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Wednesday's Analyst Blog:

News Corp. Stays a Hold for Now

News Corp. (NYSE: NWS) is a vertically integrated media company, well diversified geographically and operationally across all major markets and media platforms. On May 1, 2007, NWS confirmed that it had made an offer to Dow Jones & Company (NYSE: DJ) to acquire all of the outstanding shares of the company for $60 per share in cash, or in a combination of cash and NWS stock.

The $60 per share offer represented a 65% premium to Dow Jones previous day's closing price. Notwithstanding the significant premium being offered, we believe Dow Jones would be an attractive addition for distribution across NWS many media platforms. We maintain our Hold recommendation at current levels.

With 30% of the ordinary shares owned by CEO Rupert Murdoch, issues of control are significant. Alternatively, Rupert Murdoch has been instrumental in the growth of the company from a regional newspaper to a global media conglomerate. The stock is exposed to both key personnel risk and succession issues.

VeraSun Downgraded to a Sell

We are reducing our rating on shares of VeraSun Energy (NYSE: VSE) to Sell and adjusting our six-month target price to $18. While VSE has very favorable top-line growth prospects due to its recent and planned capacity expansions, we have a negative outlook on the long-term future of the industry as a whole. Namely, there are very few barriers to entry and producers are subject to corn, natural gas and oil price fluctuations.

Due to upward corn and downward ethanol pricing pressure, current year EPS [earnings per share] is likely to be significantly lower comparably. Full-year 2007 EPS is expected at $0.61 per share, and 2008 EPS is expected at $1.14.

Overall, our outlook on the ethanol industry is negative. First, producing ethanol is a capital intensive, commodity business with very low barriers to entry. Also, producers are subject to the volatile price spreads between corn and crude futures. The uncertain long-term demand picture also makes us cautious. While we agree that political winds currently favor ethanol, if that were to change, the government may not renew renewable fuel production mandates in 2012. This could materially lower both demand and pricing. The future of the ethanol industry is highly uncertain and investors should be cautious before committing capital.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2674.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Source: Business Wire

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