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On Wednesday, Deutsche Bank (ETR:DBKGn) analysts adjusted their outlook on New York Times stock (NYSE:NYT), raising the price target to $67 from the previous $66, while reaffirming a Buy rating. The revision reflects a fine-tuning of estimates before the company reports its fourth-quarter results for 2024.
The analysts increased their revenue projections for both subscription and other revenue streams for the quarter, which led to a slight uptick in the total revenue and Adjusted Operating Profit (AOP) forecasts.
The adjustments to the New York Times' financial estimates are minor yet positive, with total revenue and AOP expected to rise by 0.6% and 1.3%, respectively. These updated figures are anticipated to align closely with the higher end of the New York Times' quarterly guidance ranges. Looking further ahead, the multi-year estimates for the company have also been nudged upward by 0.1-0.2% for total revenue and 0.2-0.5% for AOP.
The rationale behind the $1 increase in the price target is grounded in the valuation multiples applied to the New York Times' projected earnings. Deutsche Bank's target price is based on an Enterprise Value to Adjusted Operating Profit (EV/AOP) multiple of 19.6 times their 2025 AOP estimate. This multiple does not account for artificial intelligence (AI), but when considering the potential impact of an AI licensing deal, the multiple would adjust to 18.7 times.
The New York Times has been making strides in its business model, focusing on diversifying revenue streams beyond traditional print media. Subscription growth has been a key driver for the company, bolstered by its digital transformation efforts.
As the media landscape continues to evolve, the New York Times has positioned itself to capitalize on new opportunities, including potential ventures into AI technology.
Deutsche Bank's updated price target suggests confidence in the New York Times' trajectory and its ability to achieve the higher end of its financial guidance. As the company approaches the release of its fourth-quarter results, investors will be looking to see if the performance aligns with the optimistic projections set forth by analysts.
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