Investment bank Credit Suisse is tipping Fairfax Media as a hot stock in Australia this year on the basis that it will divest its print assets, including New Zealand operations - regardless of whether the Commerce Commission approves a merger with rival NZME.
That could mean the closure of New Zealand titles if a buyer or buyers cannot be found, it says.
Fairfax New Zealand is the publisher of the Christchurch Press, Waikato Times and Dominion Post as well as the Stuff website and a number of regional papers.
NZME (publisher of the New Zealand Herald) and Fairfax NZ have proposed a merger to the NZX. It would see NZME pay Fairfax Australia $55m, with the Australian parent taking a 41 per cent stake in the merged group.
But the merger plan is subject to Commerce Commission approval. In its draft determination last November the competition watchdog indicated it planned to decline the application.
However following fresh submissions a final decision is expected by March.
In a research note to clients Credit Suisse analyst Fraser McLeish says that, while the merger may still happen and would be an optimal outcome for Fairfax, he would expect that if it doesn't go ahead the New Zealand assets would move quickly to sell to an alternative buyer.
"If there is no alternative buyer for the whole business then we would expect [Fairfax] to look to sell off titles piecemeal where possible and close publications where this is not an option."
This scenario wouldn't realise much value from the business but would achieve the goal of reducing print exposure and exiting New Zealand, McLeish wrote.
The report also predicts Fairfax Australia will move to cease publishing week day print editions of the Sydney Morning Herald and The Age (Melbourne) titles.
"We expect this process to commence in the 2017 calendar year," he wrote.
It also tips that a strategic review of its Australian regionals business will lead to either a sale or merger.
On the growth front, McLeish says the company's real estate website Domain is likely to see strong revenue growth in 2017.