New Media started at Buy at Compass Point

|By:, SA News Editor

"We view shares of New Media (NEWM) as an opportunity to invest in a viable business strategy with a clean balance sheet at a price that appropriately reflects well known industry challenges," says analyst Jason Stewart, starting the Newcastle (NCT) spinoff with a Buy and $18 price target. "At a high level, NEWM’s business strategy is simple: implement technological improvements and make strategic acquisitions. The company has several levers to pull for growth, and unlike some of its peers, a clean fair value balance sheet and minimal leverage."

Stewart's earnings estimates already account for declining circulation volumes and lower advertising per publication, and he notes the stock trades at a EV/2015 EBITDA ratio of 5.7x vs peers at 7.5x, despite better growth prospects and a cleaner balance sheet for New Media.