NEW YORK (AP) ¿ Shares of Eaton Vance Corp. advanced Friday after a Fox-Pitt analyst upgraded the investment manager, citing an improved valuation and market position.

In a note to investors, Roger Smith raised his rating to "In Line" from "Underperform" and lifted his price target to $28 from $25.

Shares of Eaton Vance rose 79 cents, or 2.7 percent, to $29.50 in afternoon trading.

Smith wrote that several previous concerns about the company's fundamentals are being addressed. He noted that the company is seeing stronger flows into funds, improving municipal bond fund performance and improving flows in muni and bank loan funds.

"We believe Eaton Vance is in a good competitive position with a diverse asset management business and strong flows," Smith said.

Smith also noted that valuation has become more aligned with expectations, with shares up 35.8 percent from the end of 2008.

Earlier this week, the Boston-based firm reported third-quarter profit of 26 cents per share. The 37 percent drop from the year-ago period was the result of lower fund inflows, the company said.

While net inflows into long-term funds were $3.9 billion compared with $5.8 billion a year ago, the inflows significantly increased from the $800 million reported in the second quarter this year.

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