NYT shares hit new 52-week high on upgrade

NEW YORK -- The New York Times Co.'s stock rose on Thursday after an analyst raised his rating and price target on the shares.

Barclays analyst Kannan Venkateshwar said the Times Co.'s recent sales of some assets have helped improve its balance sheet, while its online pay wall has generated enough new subscription revenue to offset declining print ad sales.

THE SPARK: Venkateshwar upgraded the rating on the company to "Overweight" from "Equal Weight" and raised the price target on the stock to $11 from $9.

Sales of assets, such as its About.com business for $290 million and Indeed.com for $100 million, will raise its cash level to around $935 million, Venkateshwar estimated. The company is also on pace to generate $117 million cash from core operations this fiscal year and has no near-term debt maturities to worry about.

That increases the possibility of a dividend to shareholders in the first quarter of 2013, the analyst said.

The company is also gaining digital subscribers thanks to its policy of requiring a paid subscription after 10 free article views per month. The Times is also gaining Sunday print subscribers. Gains in both areas should compensate for a decline in print ad revenues, the analyst said.

THE BIG PICTURE: The New York Times and other newspaper publishers have been buffeted by falling print ad revenue as marketers seek less expensive forms of advertising online. The Times has attempted to stave off those declines by selling some of its non-core assets and charging for online access to its stories.

THE ANALYSIS: Venkateshwar estimates that because of its circulation gains, relatively smaller print ad revenue declines and strong balance sheet, the Times Co.'s stock should trade at a slight premium to the earnings of its peer Gannett Co. That slight premium put the target price at $11.

SHARE ACTION: In afternoon trading, the Times Co.'s stock rose 30 cents, or 3 percent, to $10.28. Earlier in the day, the shares hit a new 52-week high of $10.63, well above the 52-week low of $5.88 registered in May.