Fairfax: What the insto's are thinking

Livewire Equities

Today's Fairfax result will have a fair amount of scrutiny given the recent bidding history. Will we get some insight into what it was that private equity didn’t like when they took a look under the bonnet? Here are the recent Livewire contributor insights into Fairfax ahead of this morning's result.

Hamish Carlisle, Merlon Capital

Our detailed review of Fairfax Media has focused on domain.com.au where we believe the industry backdrop is highly supportive and the company’s competitive position is both sustainable and improving. We ascribe very little value to Fairfax’s traditional print assets: (VIEW LINK)

Chris Stott, Wilson Asset Management

The proposed reforms could soon alter Australia’s media landscape dramatically. While the passage through Parliament appears somewhat circuitous, we think the reform package bill will ultimately pass through the Senate and be enacted as law in coming months. With media companies facing structural and competitive challenges, valuations of many media businesses have fallen sharply and now offer considerable value. With most investors wary of the sector, media companies offer opportunities for the contrarian investor: (VIEW LINK)

Luke Cummins, Harvest Lane

Although there were two potential bidders seemingly competing to buy the company, I wrote at the time that the team at Harvest Lane were yet to be seriously tempted to buy FXJ shares. In essence, the fact that the approaches were both highly conditional and also non-binding were enough to keep us on the sidelines as we simply felt that the downside risks were too great. What has transpired since has largely supported this view: (VIEW LINK)

What the brokers are saying

According to FNArena, 5 brokers currently have coverage on Fairfax with 4 rating the stock a buy / outperform. UBS has the stock as a hold. The consensus share price target is $1.17 (Versus current price of $1.01).


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