Post-spinoff, Deutsche Bank has initiated coverage of News Corp (NASDAQ:NWSA) with a buy rating and a $20 per share price target. Analysts Matt Chesler and Vikas Gour issued a report to investors this week saying that although the early days of the new company might be “a rough ride for investors,” they believe the company’s stock is “too cheap to ignore” and that they see good things ahead for the new company.

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News Corp After Spin-Off

After the separation of News Corp and 21st Century Fox, the new News Corp is made up of several publishing entities, many of which are in Australia. The Deutsche Bank analysts said although it’s clear there are some structural challenges the new publishing company must deal with, “investors may be surprised how little of its value the ‘troubled assets’ represent.”

The analysts note that shares of News Corp (NASDAQ:NWSA) are trading at a 50 percent discount to the company’s asset value. They also estimate that investors receive almost $5 of cash per share for free.

Concerns At News Corp

They pointed to several issues which investors will be concerned about, including falling circulation and advertising at the company’s U.K. and Australian newspapers and also renewed slippage in couponing in the U.S. Investors will also be concerned about how much capital will be needed in order to “revitalize or bulk up” the struggling businesses.

Other problems they note include the fact that News Corp (NASDAQ:NWSA) has several different businesses, and that 19 percent of its value comes from a non-consolidated business. Also Rupert Murdoch has virtual voting control at the business, so they believe investors will be discounting the stock because of that control. In fact, they used a 15 percent discount in their estimates and $20 per share price target because of it.

News Corp’s Initiatives

They also said that these risks are very well-known but noted that there are several initiatives being undertaken by News Corp (NASDAQ:NWSA)’s management right now to give the struggling company a boost. For example, they said the company is working on an extension and price increases at The Wall Street Journal. It is also transforming its enterprise media business and re-launching the U.K. newspaper The Sun with a pay wall and EPL media clips.

However, they believe that the impacts of most of these initiatives “will take more than a couple of quarters to play out.”

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