Friday, October 05, 2007

Digital Billboard

Shares of Lamar Advertising Co., which provides outdoor advertising space, climbed Thursday as a Morgan Stanley analyst said the company may top his forecast for the deployment of 350 digital billboards next year.

James Farrant said another positive catalyst for Lamar is a recent Federal Highway Administration memo clarification indicating approval for the installation of digital billboards along roadways.

"While state and local regulation is still the biggest bottleneck to digital deployment, state and local regulators have increasingly looked for federal guidance and clarification," he wrote in a note to clients.

The Texas Transportation Commission voted last month to allow digital billboards on state federal urban roadways, which could impact up to several hundred boards for Lamar and may go into effect as early as the end of November. The federal clarification could also help Lamar gain digital billboard approval in New York, its next target.

Farrant said the company's stock seems to be pricing in a 2008 advertising recession, which he doesn't think is actually going to happen -- thus opening the door for "compelling" upside to current prices.

Farrant maintained his "Overweight" rating and $75 price target.

Shares of Lamar Advertising gained $1.72, or 3.4 percent, to $52.59 in afternoon trading. Over the past 52 weeks, the stock has traded in a range of $47.35 to $71.54.