Newspaper stocks got an early Christmas present in the form of a positive note from Wells Fargo analyst John Janedis, who upgraded Gannett (NYSE: GCI) and the NYTCo (NYSE: NYT) on an improved outlook for ad revenues. In his research note, Janedis raised Gannett to outperform from underperform, while the NYTCo’s stock was moved up to market-perform from underperform. As Janedis’ memo made the rounds, by mid-afternoon, Gannett’s stock gained nearly 6 percent to $15.27, as the NYTCo rose 8.6 percent to $11.98. Still, for other newspaper companies, the pre-Xmas boost appears short-lived. McClatchy (NYSE: MNI) benefited in the morning, rising $0.18 to $3.73, but by the midday, Sacramento-based publisher’s shares were stuck at $3.55.
In his analyst note, Janedis is clear that the advertising climate is only getting “less worse” for newspapers and that we are not witnessing a wholesale rebound. Still, newspapers’ collective ability to arrest the declines, particularly in the crucial month of December, has happened more quickly that previously expected. The way things are trending, Janedis is calling for a “high single-digit decline” in overall newspaper ad spending in 2010.
As for specific newspapers, Janedis sees growing strength at the WSJ and NYT. Both will likely see a 20 percent increase in ad revneue from October to December. Still, he expects ad spending for the month of December to be flat at the NYT, year-over-year. In Gannett’s case, Janedis projects 8.5 percent decline for 2010. Considering the double digit declines the McLean, VA-based publisher has seen over the past year, that number certainly sounds like good news heading into next year.