© Reuters. New York Times (NYT) Downgraded at Cannonball Research as its ‘Not the Right Market’
By Sam Boughedda
Cannonball Research analyst Vasily Karasyov downgraded New York Times (NYSE:) to Neutral from Buy on Wednesday, lowering their 12-month price target on the stock to $31.50 per share.
Karasyov told investors that it’s “not the right market for the story” and, in their view, two conditions have to be in place for the stock to get credit for the ongoing transition to a digital subscription business model.
“First, the market has to view NYT as a sum-of-the-parts story in order to separate value creation driven by growth in the digital subscription business from the decline in the legacy business. Second, the Street’s view of the TAM has to support the current valuation,” wrote the analyst.
“Today’s market obviously doesn’t pay for TAM and the stock’s reaction to the company’s guidance for Adjusted Ebitda growth provided at the Investor Day shows the Street is currently valuing NYT based on consolidated financials rather than SOTP. We think that as a result, in a base case scenario the stock price can rise in line with Adjusted Ebitda growth which translates into only a modest upside. We therefore are lowering our 12 months’ price target to $31.50 (based on the current EV/Adjusted Ebitda multiple) and downgrading the stock to Neutral.”
New York Times shares dipped more than 2% in Wednesday’s session.
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