By: Mark Fitzgerald
New York Times Co. stock Wednesday fell nearly 7%, its biggest one-day drop in recent years, after a Lehman Brothers analyst suggested shares were over-priced and that the publisher will cut its dividend.
Times (NYSE: NYT) shares closed at $14.01, off $1.05, or 6.97%. The price matched its 52-week low.
Lehman analyst Craig Huber shaved his estimate for 2008 earnings per share (EPS) to 75 cents from 85 cents. He also reduced his 2009 EPS estimate to 65 cents from 78 cents.
Huber, who said Times stock is overpriced compared to peers such as The McClatchy Co., added he expects the stock to tumble further in the next 12 months. He lowered his price target to $8 from $11.
The Times should cut its 92-cents-per-share dividend, which costs it $133 million annually, Huber wrote. The company, which has increased the dividend in recent years, would be better off using the money to pay down its 1 billion-plus debt, he said.