• by Wayne Friedman , October 8, 2009

Media stocks could be headed north in the next couple of months -- perhaps quicker than expected, all from improved ad spending.

UBS analyst Michael Morris expects 3Q and 4Q 2009 advertising improvement, boosted by consensus estimates that say revenue at the top 100 U.S. ad spenders will climb by 3.0% in 2010.

"We expect the benefit of a move to more normalized advertising trends should become evident as these comparisons are lapped," he writes, noting that CBS, Disney, Time Warner and Viacom will be some of the beneficiaries.

Morris says there has been an over-zealousness by marketers recently, especially when looking at their sales versus ad spend. In the last two years, he reports that sales of the top 100 marketers were down just 6%, all the while that marketers were cutting back media spending by double that pace: 13%.

"The consensus ad outlook calls for a prolonged change in that trend. We expect a return to the pre-cycle relationship," writes Morris.

Last year, third-quarter sales fell 3.6% -- the start of the recession -- and activity moved south from there: a 7% decline in the fourth quarter of 2008 and a 9.5% drop in the first quarter of 2009.

But after that, the market started to regain some footing. The second quarter dropped 6.9% versus the comparable period the year before.