On Tuesday, Evercore ISI upheld its Outperform rating on New York Times (NYSE:NYT) with a consistent price target of $56.00. The firm's analysis followed the release of the company's third-quarter 2024 financial results, which matched expectations and provided a fourth-quarter outlook suggesting a slight 1-2% revenue and adjusted operating profit above consensus estimates at mid-points.
New York Times reported digital-only subscriber additions of 260,000 during the quarter, slightly below the anticipated 280,000, sparking concerns about the total addressable market, especially for the core news product. Despite this, an increase in average revenue per user (ARPU) contributed to a modest 1% surpass in digital-only subscription revenue, which climbed by 14% year-over-year. Additionally, the company experienced the highest digital advertising revenue growth in over three years, with a 9% increase.
The company's bundle and multiproduct offerings continue to bolster subscriber growth, and year-over-year declines in ARPU have significantly narrowed as it approaches a positive turning point. However, subscriber growth is still trailing behind the company's 2027 goal of 15 million subscribers. Furthermore, the recent strike by the NYT Tech Guild, which began on the eve of the presidential election, has introduced some short-term uncertainty.
The sustainability of New York Times' current growth trajectory is an area of focus, particularly after the presidential election and as the company moves into 2025. Achieving milestones toward the 2027 targets set by management will be crucial in the coming years.
In other recent news, The New York Times Company has reported a strong financial performance in the third quarter of 2024. The company's earnings per share (EPS) increased to $0.45, driven by a 16% rise in adjusted operating profit and an expansion of the AOP margin to 16.3%. This robust growth was largely due to substantial gains in digital subscriptions and advertising revenue.
The New York Times added 260,000 digital subscribers this quarter, bringing its total subscribers to over 11 million. 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. Despite ongoing union work stoppages among technology employees, the company has factored the estimated impacts into its Q4 guidance, forecasting continued revenue growth across digital subscriptions and advertising.
Furthermore, the company anticipates digital-only subscription revenue growth of 14% to 17% for Q4 2024. The New York Times is confident in its subscription strategy and aims for midterm targets related to subscriber growth and capital returns. Lastly, other revenues are forecasted to grow 11% to 13%, primarily driven by Wirecutter affiliate revenues.
InvestingPro Insights
Recent data from InvestingPro adds depth to the analysis of New York Times (NYSE:NYT). The company's P/E ratio of 33.65 reflects the market's optimistic outlook on its earnings potential, aligning with the Evercore ISI's Outperform rating. This is further supported by an InvestingPro Tip indicating that NYT is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential undervaluation despite the high multiple.
The company's financial health appears robust, with an InvestingPro Tip highlighting that NYT holds more cash than debt on its balance sheet. This strong liquidity position could provide flexibility for future investments in digital initiatives and bundle offerings, which are key to achieving the company's 2027 subscriber goals.
NYT's commitment to shareholder returns is evident in its dividend policy. An InvestingPro Tip notes that the company has raised its dividend for 6 consecutive years, with a current dividend yield of 0.99%. This consistent dividend growth, coupled with a 26.12% one-year price total return, demonstrates the company's ability to deliver value to investors while pursuing its long-term growth strategy.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for NYT, providing a deeper understanding of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.