Lehman Brothers Cuts Times Co. Rating to ‘Underweight’

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By: E&P Staff

Lehman Brothers analyst Craig Huber in a client note Monday cut his rating of New York Times Co. to “underweight” from “equal weight,” because advertising revenue is “deteriorating” in its newspaper business.

“We remain concerned about the deteriorating top line at all three of the company’s newspaper divisions,” Huber wrote.

The analyst noted that the Boston Globe reported January ad revenue declined 10% from a year ago, while ad revenue at the flagship New York Times has been “weak” since 2001. The company’s regional papers have also taken “a significant turn for the worse,” Huber wrote.

New York Times stock has actually been on a rise, climbing nearly 14% in the past month, the analyst noted. The stock increase factored into the ratings downgrade, Lehman said.

“We are concerned that there is downside risk to Street estimates,” he wrote.

Huber affirmed an $18 target price for the Times Co., which traded at $25.61 down 42 cents, or 1.6%, at 10:32 a.m. EST Monday.

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