UPDATE: Benchmark Upgrades Lamar Advertising Company

Benchmark raise its rating on Lamar Advertising LAMR from Hold to Buy given the year to date 20% correction in Lamar's stock and the likelihood that Lamar can deliver reliable growth as the advertising recovery is sustained. Lamar may still reach its 1Q11 guidance of $256 million in revenue, up 4.5%, despite local sales rising only 3% because national advertising sales have been and should continue to outpace local. In 4Q10 local advertising sales improved 3% y/y while national jumped 10% y/y leading to 5% total revenue growth. Rate and occupancy trends remain positive and demand could build through the year. Lamar's management has been strict with cost control and has limited spending on investments, enabling meaningful debt reduction. Lamar's debt has dropped from over $3 billion to under $2.4 billion. It now stands below 5x 2011E EBITDA. For 1Q11, Benchmark maintains its forecast of a 5% y/y increase in net revenue to $256 million leading to $97 million in EBITDA, up 7% y/y. EPS could be a loss of $0.21. Its 2011 estimates remain unchanged. Benchmark forecasts 2011 net revenue of $1.16 billion, up 6% y/y. EBITDA could be $500 million, up 7.5% y/y, with an anticipated 60bp y/y expansion in EBITDA margin. Its EPS estimate is a loss of $0.11. Free cash flow could be $2.70 per share. LAMR closed at $32.17