Gannett Co. shares climbed Monday after an analyst at The Benchmark Co. upgraded the stock, citing improving prospects for the newspaper publisher and what he sees as solid management strategy.
Gannett shares rose 71 cents, or 5.4 percent, to $13.87.
In a client note, analyst Edward Atorino raised his rating to “Buy” from “Hold” and his price target to $18 from $16.
The analyst said that Gannett cut costs by restructuring U.S. newspaper operations – it consolidated its printing operations and cut full-time employees by 24 percent this year. He also noted that it will centralize its advertising production in two centers by 2011.
The moves “resulted in a significant decline” in publishing operating expenses this year, he said, and he thinks other cost-cutting actions at its U.K. operations will also reduce expenses.
“With solid franchises in small local newspaper markets in the U.S. and U.K., and ongoing efforts to expand content through new print and new media products, we believe Gannett is well positioned to weather the prolonged downturn in the newspaper publishing industry,” he added.
The analyst also said that Gannett could see $75 million to $100 million in TV advertising revenue from the winter Olympics and 2010 elections.