Morgan Stanley downgraded the newspaper stocks New York Times (NYT ), E.W. Scripps (SSP ), Tribune (TRB ) and Washington Post (WPO ) to underperform from neutral. The group lost ground Thursday on the news.
Analyst Douglas Arthur says newspaper stocks have strongly outperformed the S&P 500 index in 2002 despite a clear lack of imminent ad recovery. Therefore, he moves to underperform on group. He says as newspaper stocks have moved ever higher, valuations have been stretched to 20 times 2004 EPS estimates. He believes some catalyst needs to happen soon to justify a further up move in the stocks.