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Scripps Networks shares peak after UBS upgrade

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NEW YORK (AP) — Shares of Scripps Networks Interactive Inc. climbed to a new year high Monday after an analyst upgraded the owner of HGTV and the Food Network, predicting advertising growth.

UBS analyst Michael C. Morris raised his rating to “Buy” from “Neutral” and boosted his share price target to $52 from $39.

On average, analyst estimates “significantly underestimate the earnings power of affiliate fee increases and ad growth driven by higher ratings at Food Network and HGTV,” he wrote in a note to clients.

Ratings are strong at both channels in their core prime-time demographic, adults between 25 and 54. But the two channels have “yet to fully benefit” from their sustainable popularity, he said.

“The weaker ad environment in 2009 has limited growth, but an improved market and strong buyer interest should drive above average ad growth in 2010,” Morris said.

The analyst also thinks expectations for the Travel Channel are modest, given the size of its audience.

For 2010, Morris expects a profit of $2.44 per share for Scripps. On average, analysts polled by Thomson Reuters expect income of $2.01 per share.

Shares of Cincinnati-based Scripps Networks rose $2.20, or 5 percent, to $45.94 in midday trading. Earlier, the stock hit $46, eclipsing a previous 52-week high of $44.61 set Jan. 6.