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On Tuesday, CFRA, a financial research firm, updated its outlook on New York Times Co (NYSE:NYT), increasing the 12-month price target to $58 from the previous $57. The firm has maintained its Hold rating on the media company's shares.
The adjustment in the price target comes after New York Times reported third-quarter earnings per share (EPS) of $0.45, surpassing both CFRA's estimate of $0.37 and the consensus estimate of $0.41. The company's revenues rose by 7%, propelled by a 14% increase in digital subscription revenues and an 8.8% increase in digital advertising revenues. However, there was a slight dip in adjusted operating margins, down to 17.0% from 17.3%.
CFRA's analyst cited the company's robust subscriber growth as a key factor in the revised target price. As of September 30, 2024, New York Times' total subscriber base reached 11.1 million, marking a nearly 10% increase from the previous year. The digital subscriber count also saw a significant jump, with an over 11% increase to 10.5 million.
In addition to the subscriber growth, CFRA has raised its EPS estimate for 2024 to $1.92, up $0.08. The firm's 2025 EPS estimate has also been raised by $0.10 to $2.10, valuing NYT shares at 28 times the 2025 EPS estimate. This valuation is in line with the one-year average forward multiple of 28x and remains above the peer average of 17.6x.
Looking ahead, CFRA expects a 7.2% revenue growth for New York Times in 2025. This projection is based on the company's continued digital subscriber and advertising growth, which is believed to support the premium valuation of the shares compared to its peers.
In other recent news, New York Times has reported robust financial results for the third quarter of 2024. The company's earnings per share increased to $0.45, a result of a 16% rise in adjusted operating profit and an expansion of the AOP margin to 16.3%. This growth was primarily driven by gains in digital subscriptions and advertising revenue, with the company adding 260,000 digital subscribers in the quarter.
Evercore ISI maintained its Outperform rating on the New York Times, following the release of these results. The company's digital advertising revenue grew by 9%, marking the highest growth in over three years. Meanwhile, the company's multi-product strategy, including the all-access bundle, is projected to drive bundle subscribers to over 50% of the total by the end of 2025.
Amidst these developments, New York Times anticipates a 14% to 17% growth in digital-only subscription revenue for Q4 2024. However, the recent strike by the NYT Tech Guild has introduced some short-term uncertainty.
InvestingPro Insights
To complement CFRA's analysis, recent data from InvestingPro offers additional insights into New York Times Co's financial position. The company's market capitalization stands at $8.72 billion, reflecting its significant presence in the media industry. New York Times has demonstrated strong profitability, with a revenue of $2.51 billion over the last twelve months as of Q3 2024, showing a 4.98% growth. This aligns with CFRA's positive outlook on the company's revenue growth.
InvestingPro Tips highlight that New York Times has raised its dividend for 6 consecutive years, indicating a commitment to shareholder returns. This is particularly noteworthy given the company's ability to maintain dividend payments for 12 consecutive years, even amid industry challenges. The company's financial health is further underscored by the fact that it holds more cash than debt on its balance sheet, providing financial flexibility for future growth initiatives.
While the P/E ratio stands at 31.22, which might seem high at first glance, an InvestingPro Tip suggests that NYT is trading at a low P/E ratio relative to its near-term earnings growth. This could indicate potential undervaluation, especially considering the company's strong subscriber growth and digital transformation efforts mentioned in the CFRA report.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for New York Times Co, providing a deeper understanding of the company's financial health and market position.
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