Analyst upgrades Arbitron on People Meter prospects

Analyst Alexia Quadrani expects the meters, an audience measuring system that can track what consumers watch on television or listen to on the radio, will help boost earnings. The system is widely viewed as a much-needed upgrade to the 1960s-era paper diary system currently in use.

Late last year, New York-based Arbitron agreed to delay the rollout of the meter system in nine major markets following pressure from broadcasters who said the system's inability to capture enough data from certain demographic groups was compromising the validity of the new measurements. Arbitron has said it will fix the problems.

Quadrani said industry sentiment is starting to turn more in favor of the new system and will ultimately benefit the company.

"We believe Portable People Meter ratings represent a clear and eventual improvement for the industry that will happen even if another delay were to occur," she wrote in a client note.

Quadrani lifted her rating to "Outperform" from "Peer Perform" and reiterated a $56 price target.

Shares of Arbitron added 91 cents to $48.92 in afternoon trading.