NEW YORK (TheStreet) -- New York Times Co. (NYT) was upgraded to "overweight" from "equal weight" by analysts at Evercore who also increased the stock's price target to $18.50 from $16.50 in a note released Thursday.
Evercore listed the media company's new four week $8 subscription price as a reason for the upgrade. The new pricing scheme will attract a younger more diverse group of subscribers in the firm's opinion.
"We believe the new low-priced tier is potentially transformative. A new, low-priced digital tier...has the potential to draw in a new, younger pool of subscribers, transform the model and attract new advertisers while adding to revenues and earnings." Evercore said in a client report.
"We have modeled the three new price plans through 2018 and believe they will add significantly to revenues and earnings, both near-term and longer term," the note concludes.
The New York Times stock closed down 0.6% to $16.19 on Wednesday.
TheStreet Ratings team rates NEW YORK TIMES CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NEW YORK TIMES CO (NYT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.81, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.01, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NEW YORK TIMES CO is rather high; currently it is at 62.94%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.78% is above that of the industry average.
- Net operating cash flow has significantly increased by 155.12% to $24.79 million when compared to the same quarter last year. In addition, NEW YORK TIMES CO has also vastly surpassed the industry average cash flow growth rate of -11.84%.
- Compared to its closing price of one year ago, NYT's share price has jumped by 61.79%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- NEW YORK TIMES CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NEW YORK TIMES CO reported lower earnings of $0.36 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.36).
- You can view the full analysis from the report here: NYT Ratings Report