Avid Up 10% on JP Morgan Upgrade

Hot on the heels of JP Morgan’s (JPM) technology, media and telecom conference in Boston last week, analyst Paul Coster this morning upgraded shares of beleaguered video post-prodution technology vendor Avid (AVID) to “Overweight” from “Underweight,” on the belief that cable companies and many broadcast television networks will speed up their switch to hi-def programming next year, and Avid’s wares will be needed for the switch.

His price target goes to $17 from a prior $11.

“We forecast a solid recovery in TV broadcast spending in 2010-2011,” writes Coster, noting that “the Chinese government proposes a very significant investment in HD production at the national and local TV station level,” while Europe has mandated HDTV standards, which should boost sales of HD sets, which should, in turn, boost spending on production of HD content. Coster notes that Avid management said on their Q1 conference call that the company can turn profitable on $665 million in revenue; Coster is projecting $672 million this year and 85 cents per share in profit.

Those numbers are well ahead of the Street’s estimates of $660 million and breakeven at the bottom line. Coster thinks the company can see 10% to 12% growth in its video tools business, and that it can contain expenses, boosting gross profit margin by 1.3 percentage points and turning in operating profit of 5.7%.

Coster notes that at the previous close, the stock traded at 15 times his 85-cent estimate, which is cheaper than the shares of competitors such as Dolby Laboratories (DLB), Macrovision Solutions (MVSN), and DivX (DIVX).

(Curiously, no mention of competition from Apple (AAPL), which has taken some share from Avid in some product categories.)

Avid shares today are up $1.41, or 11%, at $14.50.