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MARKETS LIVE BLOG:

STOCKS TRADE MIXED AFTER ISRAEL STRIKE-FUELLED TUMBLE

Shares of Netflix, the first of the megacap techs to report, slide in early trading

NY Times (NYT) Displays Solid Run, Adds 45% in 3 Months

Zacks Equity Research
·4 min read

The U.S. newspaper publishing industry has been grappling with declining print readership and advertising revenues for quite some time now, and the scenario has worsened due to the coronavirus pandemic. Nevertheless, the industry participants are evolving from being just pure news-content providers and advertisement platforms. In this regard, The New York Times Company NYT has done a commendable job.

The company has been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. Notably, the company’s business model with greater emphasis on subscription revenues and lower dependency on traditional advertising revenues and sturdy balance sheet puts it in a better position to tide over the pandemic.

Undoubtedly, the concerted efforts have led the shares of this news and information provider to gain 45.7% in past three months compared with the industry’s rally of 44.1%. This Zacks Rank #3 (Hold) stock is trading close to its 52-week high of $43.26. In all likelihood, the company with a Growth Score of A can attain new highs.



Let’s Delve Deeper

Rapid digitization in the core areas of advertising, subscriptions and sales, and distribution services has turned out to be a major source of revenues. With the growing inclination of readers toward the Internet, newspaper companies started trimming their print operations, and divert resources toward online publications. The New York Times Company has been constantly making efforts to rapidly acclimatize to the changing face of the multiplatform media universe.

Notably, the company’s paid digital subscribers reached roughly 5,001,000 at the end of first-quarter 2020 – rising 587,000 sequentially and 1,399,000 year over year. Of the 587,000 total net additions, 468,000 came from the digital news product, while remaining came from Cooking, Crossword and audio products.

Subscription revenues improved 5.4% year over year primarily due to increase in the number of subscriptions to the company’s digital-only products, which include news product, and Cooking, Crossword and audio products. Revenues from digital-only products jumped 18.3% from the year-ago period. Management envisions second-quarter 2020 total subscription revenues to increase in the mid-to-high-single digits, while digital-only subscription revenues are projected to rise in the high-twenties.

Near Term Concerns

Advertising remains a significant source of revenues for The New York Times Company. Total advertising revenues declined 15.2% during the first quarter, while digital advertising revenues decreased 7.9%. Looking into the second quarter, management cautioned about sharp fall in advertising revenues, owing to coronavirus pandemic that compelled industries across the board to curtail marketing expenditures. Total advertising revenues in the second quarter are estimated to decline approximately 50-55%. Also, management expects digital advertising revenues to decrease roughly 40-45% in the quarter.

Wrapping Up

The New York Times Company has been diversifying business, adding new revenue streams, realigning cost structure and streamlining operations to increase efficiencies. The company has been undertaking initiatives to lower dependency on traditional advertising and focus on digitization. The company is not only gearing up to become an optimum destination for news and information but is also focusing on lifestyle products and services. We believe that such consistent endeavors will help the stock to retain momentum.

3 Stocks That Deserve Your Attention

TEGNA TGNA, which sports a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Netflix NFLX, which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 30%.

Sirius XM Holdings SIRI has a long-term earnings growth rate of 14.2%. The stock carries a Zacks Rank #2.

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>


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Sirius XM Holdings Inc. (SIRI) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
The New York Times Company (NYT) : Free Stock Analysis Report
 
TEGNA Inc. (TGNA) : Free Stock Analysis Report
 
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Zacks Investment Research