Dow Jones stock: Buy, sell or hold?
Investors looking to cash out may be tempted after Murdoch's surprise offer; Wall Street pros weigh in.
NEW YORK (CNNMoney.com) -- Dow Jones & Co. stock soared after Rupert Murdoch's surprise $5 billion bid for the publisher of the Wall Street Street Journal, giving investors a chance to grab a quick profit in a troubled sector.
But is now the right time to sell?
"I'm not telling people to dump the stock because it's not over yet," said Edward Atorino, an analyst with The Benchmark Co., who cut his rating on Dow Jones stock from "buy" to "hold" after the offer was announced Tuesday.
Murdoch "wanted to get [Dow Jones'] attention and he did," said Atorino, referring to the $60-a-share offer from the chairman of News Corp (Charts, Fortune 500). "They would not have paid attention to him if he offered $40, that wouldn't have done anything, but $60 - now he's got their attention."
There are substantial obstacles to a buyout by News Corp. The Bancroft family, which controls Dow Jones through a class of stock with supervoting power, has signaled it will reject the offer.
Still, some analysts said the price may be too compelling to refuse, meaning it might be a good time to take profits if you've held the stock through some of the newspaper industry's tougher times.
"While we do not believe the family was looking to sell the company and does have concerns about maintaining journalistic integrity, this offer may be hard to refuse, Alexia Quadrani, an analyst with Bear, Stearns & Co., wrote in a research note.
The Bancrofts may have concerns about selling a company that's been in their family's control since Clarence Barron bought Dow Jones in 1902.
Dow Jones issued a statement Tuesday saying its board and members of the family were reviewing the proposal, while News Corp. said in a statement its bid was a "friendly" offer.
Some analysts think the announcement could have a negative effect on News Corp. Spencer Wang of Bear, Stearns & Co. wrote in a research note that the offer could cause the stock to tread water until investors get comfortable with a possible deal.
Analysts were divided over whether another buyer might emerge. The stock, which jumped about 57 percent Tuesday, edged back just a fraction Wednesday. At $60, the offer was 65 percent above Monday's closing price for Dow Jones.
Holding the stock may bring a higher price if a another bid emerges.
But if not, and the News Corp. deal doesn't happen, Dow Jones shares could sink back to around $40, wrote Lisa Monaco, an analyst with Morgan Stanley, in a research note.
Benchmark's Atorino said if News Corp. really wanted to get Dow Jones' attention, it should have bid more like $76, near the all-time high for Dow Jones stock, hit in June 2000.
"[Murdoch] is not concerned about the short term return - it's a strategic move to build a global network," Atorino said. "It's like wanting to start a baseball team. Do you hire 41 players or buy the Yankees?" he said. "What he's trying to do is buy the Yankees."