NEW YORK ( TheStreet) -- Time Warner ( TWX) shares are gaining today after analyst Jeffrey Logsdon with BMO Capital Markets upgraded the company to a buy rating from a neutral and raised his 9- to 15-month price target to $40 from $35.

Time Warner is up 0.8% to $33.56 today, trading at the high end of the stock's 52-week price range of $26.43 to $34.07.

Logsdon attributed his rating upgrade to his belief that the company is well positioned to generate earnings and free cash flow growth "that is attractive relative to its peers."

"The profitability of its filmed entertainment and cable networks divisions, as well as the impressive turnaround in publishing, should drive Time Warner's equity valuation," Logsdon said.

He raised his 2010 fiscal year earnings estimate to $2.37 per share from $2.30. He also boosted his 2011 earnings expectation to $2.72 a share from $2.59 a share and his 2012 estimate to $3.03 a share from $2.90 a share.

Logsdon predicts that the media company will benefit from a strong movie lineup in 2011 after gaining on "healthy contributions" from the Harry Potter film released at the end of 2010.

Time Warner's Warner Bros. released the first part of the seventh and final installment of the Harry Potter movie franchise, Harry Potter and the Deathly Hallows: Part 1 in November, 2010. The film grossed $125 million in its first weekend, earning more than either of its prequels in opening weekend box office sales.

Going into 2011, Logsdon believes the company will see a double digit percentage increase in its "divisional operating income," driven by the release of Harry Potter and the Deathly Hallows: Part 2 in July, The Green Lantern, The Hangover 2 and Happy Feet 2.

He also believes the company will improve its operating income in 2010 to close to $450 million from $246 million in 2009, due to its successful film and TV content. He also estimates at least mid single digit growth in its operating income in 2011 and 2012.

"We believe Time Warner's cable networks (an estimated $4.2 billion operating income business in 2010), especially TBS and TNT, are making a favorable turn in ratings," he said in his Jan. 11 research note.

Time Warner is positioned to benefit from the improving television and advertising market as well as expected higher ratings at its networks in 2011. He mentioned that he is not concerned about the threat of "cord cutting" as the company implements TV Everywhere.

The company is scheduled to release its fourth-quarter earnings report on Feb. 2 before the market open. Analysts polled by Thomson Reuters estimate quarterly earnings of 62 cents a share.

-- Written by Theresa McCabe in Boston.

>To contact the writer of this article, click here: Theresa McCabe.

>To follow the writer on Twitter, go to @TheresaMcCabe.

>To submit a news tip, send an email to:


Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.