News Corp shares sink on downgrade, price cut

NEW YORK (Reuters) - Rupert Murdoch's News Corp NWSa.N shares fell 4.5 percent after Bernstein Research and UBS cut its price target on concerns over the long-term growth of its Internet division.

Although revenue from News Corp's Fox Interactive Media, now expected to fall short of its $1 billion fiscal 2008 revenue target, account for only a small percentage of the company's overall revenue, its growth has helped the shares trade at a premium to its big media peers.

Bernstein Research cut its rating on the stock to "market perform" from "outperform" and cut its price target to $21 per share from $24.

"As one of our key long-term profit drivers, FIM/MySpace's ability to meet near-term consensus estimates, despite increased usage, worries us about the accuracy of long-term forecasts," Bernstein Research analyst Michael Nathanson said in a research note on Monday.

UBS trimmed its price target on News Corp to $25 from $26, on "uncertainty" of the futures of Fox Interactive Media and Sky Italia pay satellite television service, but maintained the firm's "buy" rating on the stock.

UBS analyst Michael Morris said investors would welcome more information from News Corp on its Internet advertising strategy.

News Corp said in early April it would reorganize Fox Interactive Media, amid expectations it will fall short of its fiscal 2008 revenue target of about $1 billion.

(Reporting by Kenneth Li, editing by Maureen Bavdek)