Martha Stewart Living Revisted

NEW YORK (AP) -- Shares of Martha Stewart Living Omnimedia Inc. rose, then slipped Friday, even as an analyst initiated coverage with an "Outperform" rating, saying the media company will likely be able to capitalize on its licensing opportunities and healthy performance at its namesake magazine.
David Bank of RBC Capital Markets Corp. said Martha Stewart Living Omnimedia should be able to expand its merchandise licensing business, as the company has a loyal customer base and strong brand awareness. While the company already has deals with businesses such as Macy's Inc. and Costco Wholesale Corp., the analyst predicts it will be able to add more retail partnerships in the future.
In a client note, Bank said he also sees advertising on the rise at Martha Stewart Living magazine, as businesses return to the fold following Martha Stewart's much-publicized prison term.
"As the company moves on, the publishing segment has experienced quarterly advertising growth of at least 20 percent for the past two years," he wrote.
Bank is also pleased with the company's online efforts, which included a relaunch of its Web site in April and the June announcement that Wenda Harris Millard, former chief sales officer of Yahoo Inc. and a founder of DoubleClick, came on board in the new role of president of media.
"Changes made since then have driven pageviews up over 50 percent in the fourth quarter of 2007, which we expect Martha Stewart Living Omnimedia should be able to monetize in 2008," he said.
The analyst gave the company a $9 price target.

Separately, David Kestenbaum of Morgan Joseph & Co. downgraded the company to "Hold" from "Buy" on near-term economic concerns but remained upbeat on its long-term growth potential.
Shares of Martha Stewart Living Omnimedia lost 4 cents to $6.13 after rising as high as $6.44 earlier in the day. Over the past year, the stock has traded between $5.22 and $19.50.