Shares of The New York Times Company (NYT) rose more than 4% during Wednesday's session after Morgan Stanley initiated coverage on the stock with an Overweight rating and a $55.00 price target.

Key Takeaways

  • New York Times shares moved sharply higher after Morgan Stanley initiated coverage on the stock at Overweight with a $55 price target.
  • The analyst believes that the company will achieve higher-than-consensus digital subscriber growth over the next five years.
  • Technical indicators suggest that the stock could have more room to run over the coming sessions before experiencing consolidation.

Morgan Stanley analyst Thomas Yeh believes that The New York Times will achieve higher-than-consensus digital subscriber growth. In particular, the analyst believes that the company is a winner in the winner-takes-most digital news market, with a unique opportunity to scale its paid subscriber base in a growing global premium news market.

With expectations for 12 million to 13 million digital-only subscribers by the end of 2025, representing 10% to 15% penetration of the addressable market, Morgan Stanley sees about 20% upside potential to the shares with its $55.00 price target. The analyst remains confident in the pricing power due to the company's investments and its lower content cost inflation.

Chart showing the share price performance of The New York Times Company (NYT)
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From a technical standpoint, the stock briefly broke out from trendline resistance during Wednesday's session before giving up ground. The relative strength index (RSI) remains at neutral levels of 57.78, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock has more room to run over the coming sessions before experiencing some consolidation.

Consolidation is a technical analysis term referring to security prices oscillating within a corridor and is generally interpreted as market indecisiveness. Said another way, consolidation is used in technical analysis to describe the movement of a stock's price within a well-defined pattern of trading levels.

Traders should watch for a breakout from trendline resistance to retest highs of around $48.00. If the stock fails to break out, traders could see a move lower to test the 50-day moving average at $43.58 or trendline support near the same level. A further breakdown could lead to a move toward prior lows of $41.00, although that scenario seems less likely to occur.

The Bottom Line

Shares of The New York Times rose more than 4% during Wednesday's session after Morgan Stanley initiated coverage on the stock with an Overweight rating and a $55.00 price target. Analyst Thomas Yeh believes that the company will see better-than-expected digital subscriber growth.

The author holds no position in the stock(s) mentioned except through passively managed index funds.