After a nearly 27% decline year-to-date (YTD), at the current price of around $35 per share, we believe New York Times’ stock (NYSE: NYT), a diversified media company that includes newspapers, internet businesses, television, and radio stations, looks appropriately priced. NYT stock has declined from around $48 to $35 YTD, largely underperforming the broader indices, with the S&P declining about 16% over the same period. Fears of a slowing economy, driven by record inflation, are largely responsible for the stock decline during this period. Another reason for the decline in share price is the M&A strategy adopted by the company to support its growth. We believe that NYT stock may remain under pressure for the foreseeable future as it continues to wrestle with the industry-wide slowdown in digital advertising. For the upcoming Q4, NYT’s digital ad revenues and the larger total ad revenues are expected to decline by about 10%. However, NYT sees digital-only subscription revenue (excluding The Athletic) rising to about 20% y-o-y, and total subscription revenue up 10% to 13% in Q4 2022.
NYT’s Q3 revenue grew 8% year-over-year (y-o-y), mostly in line with expectations, to $547.7 million – as subscriptions made up for the weakness in advertising. To break down the revenue gains further, advertising revenue dipped fractionally y-o-y to $110.5 million, but subscription revenues rose 12% to $382.7 million. The company’s total subscriptions came in at 10.75 million out of which digital-only subs were 10.02 million. The company now set a new target of at least 15 million total subscribers by the end of 2027.
We forecast NYT’s Revenues to be $2.3 billion for the fiscal year 2022, up 12% y-o-y. Looking at the bottom line, we now forecast earnings per share (EPS) to come in at $1.05. Given the changes to our revenues and EPS forecast, we have revised NYT’s Valuation to $34 per share, based on a $1.05 expected EPS and a 32.6x P/E multiple for the fiscal year 2022 – 3% lower than the current market price. That said, the company’s stock appears appropriately priced at the current price.
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NY Times is changing its fiscal year to line up with the calendar year, fixing what was set to be a six-day offset. With the 2022 fiscal year now ending on Dec. 31, 2022, the company’s fourth quarter will contain an extra six days compared with the fourth quarter of 2021.
It is helpful to see how its peers stack up. NYT Peers shows how NYT’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
With inflation rising and the Fed raising interest rates, New York Times has fallen 27% this year. Can it drop more? See how low can NYT stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||4%||-16%||80%|
|Trefis Multi-Strategy Portfolio||4%||-19%||221%|
 Month-to-date and year-to-date as of 11/25/2022
 Cumulative total returns since the end of 2016
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