Credit, Equity Analysts Taking New Look at New York Times Co.

By: Mark Fitzgerald

After The New York Times Co. beat Wall Street expectations with its first-quarter profits, two influential ratings firms, on the credit and equity side, are now suggesting the publisher may be in for an upgrade.

Credit rater Standard & Poor’s said it has put the company’s rating on review for a possible upgrade from its present B rating, deep in speculative-grade or “junk” territory.

“The CreditWatch listing reflects a significant moderation in the pace of ad revenue decline in the March 2010 quarter, signaling the potential that The New York Times could achieve and sustain credit metrics and a liquidity profile in line with a higher rating,” S&P credit analyst Emile Courtney said in a note.

On the equity side, the independent financial research firm Morningstar issued a note to investors saying it was putting under review its “fair value estimate” for the price of Times Co.’s common stock (NYSE: NYT). Morningstar said it is reviewing that price as it transfers coverage of the company to a new analyst.

But its previous fair value estimate of $4 a share, declared last December, is far below the current trading price of NYT, which at mid-morning Friday was $11.87, off 42 cents from its open.

Morningstar is famously pessimistic about the newspaper business, which outgoing analyst Carlton Moore described as a “perennially declining industry,” in a note to investors last December. In 2008 it took the lead among stock analysis firms in declaring that the fair value of several stocks was $0 a share.

Beginning last summer, newspaper stocks have rebounded strongly since their historic lows during late 2008 and early 2009. Times stock, for instance, traded as low as $3.50 a share in March 2009. This year it has reached as high as $14.87.

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