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The New York Times Company (NYSE:NYT) was in focus on Tuesday after Citi initiated coverage on the media company with a Buy rating and $52 price target.
Led by Chief Executive Meredith Kopit Levien, The New York Times is in the middle of a “thoughtful, well-executed digital pivot that should allow it to grow revenues at a mid-single-digit pace through 2026,” Citi analyst Jason Bazinet wrote in an investor note.
Shares were up 1.1% in premarket trading on Tuesday.
Reinvention
Five times over the past 25 years, The New York Times has changed itself, and it is in the midst of the latest change, placing an emphasis on bundles, Bazinet explained.
The New York Times has added lifestyle products such as games, recipes and shopping content to the bundle in recent memory, as well as expanded sports coverage via its acquisition of The Athletic.
With the increased emphasis on bundling subscriptions, Wall Street’s estimates for revenue growth in 2024 and the first-half of 2025 revenue are seen as “reasonable” though the back-half of 2025 and 2026 may fall short of estimates, Bazinet cautioned.
A consensus of analysts expect the company will earn $1.68 per share on $2.56B in revenue in 2024.
Cash use is ‘key’
The New York Times had roughly $452M in cash and marketable securities on what Bazinet described as a “pristine” balance sheet at the end of 2023. However, the company has been “gradually increasing” the amount it pays in dividends and uses for share buybacks.
Assuming a gradual growth in both dividends and buybacks, the company is still likely to have roughly $1.1B in net cash and marketable securities by the end of 2026, or roughly 15% of the company’s current market cap, Bazinet said.
“As such, smart accretive acquisitions will be critical to the equity performance,” Bazinet said. “In addition, it may mitigate our concerns about the Street’s topline forecasts in late 2025 and into 2026.”