Shares of The New York Times Company (NYT - Analyst Report) reached a new 52-week high of $16.11 yesterday. This diversified media conglomerate eventually closed trade at $16.09, recording a year-to-date return of 85.2%.
Based on the current price, The New York Times Company is 23.8% above the Zacks Consensus average analyst price target of $13.00. The company currently trades at a forward P/E of 47.17x, a substantial premium to the peer group average of 18.33x, hinting at a limited upside potential.
Tough economic conditions along with softness in advertising demand have been weighing upon the performance of this Zacks Rank #4 (Sell) stock. We observe that The New York Times Company’s total advertising revenue slid 2% in the third quarter of 2013, which however, portrayed the lowest quarterly decline in 3 years. Print advertising dipped 1.6% during the quarter.
Other publishing companies such as Journal Communications, Inc. , The E.W. Scripps Company (SSP - Snapshot Report) and Gannett Co. Inc. (GCI - Snapshot Report) are also encountering similar headwinds. Advertisers are shying away from making any upfront commitments in an economy that is showing an uneven recovery.
In order to shield itself, The New York Times Company has been adding diverse revenue streams, which include a circulation pricing model and a pay-and-read model to make it less vulnerable to the economic conditions. The company is also adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio.
Despite hiccups in the economy, what still guarantees revenue generation is The New York Times Company’s pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company also recently announced that mobile app users will now be able to access a maximum of three articles per day from over 25 sections, blogs and slideshows, before being asked to subscribe.
The New York Times Company has also been offloading its assets to better position itself and focus on core areas. The company completed the sale of Regional Media Group in Jan 2012 to re-focus on its core newspapers and pay more attention to its online activities. The company divested its remaining stake (210 Class B units) in the Fenway Sports Group in May 2012.
The company, in Sep 2012, completed the sale of About Group and sold its stake in Indeed.com in Oct 2012. Most recently on Oct 24, 2013, it completed the sale of New England Media Group, including The Boston Globe and its allied properties to an acquisition company spearheaded by John W. Henry, who owns Fenway Sports Group, for about $70 million in cash.