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HomeAway shares hit 52-week high after upgrade

NEW YORK (AP) -- Shares of HomeAway Inc. hit a new 52-week high Thursday after a Morgan Stanley analyst upgraded the vacation rental website operator, predicting better-than-expected profits.

THE SPARK: Scott Devitt raised his rating for HomeAway to "Overweight" from "Equal-Weight," saying that he doesn't think other analysts are fairly factoring in the company's continued increase in average subscription revenue per listing and the potential boost it could get from its new pay-per-booking option.

THE BIG PICTURE: Austin, Texas-based HomeAway runs websites HomeAway.com, VRBO.com, and VacationRentals.com in the U.S. and related sites in the U.K., Germany, France, Spain, Brazil, and Australia. It also runs BedandBreakfast.com.

Earlier this year, the company projected first-quarter revenue of $78 million to $79 million and full-year revenue of $339 million to $343 million. Analysts polled by FactSet expect revenue of $78.6 million for the first quarter and $341.3 million for the full year.

THE ANALYSIS: Devitt called HomeAway "the most attractive business" in its sector. He expects HomeAway's average subscription revenue per listing to grow by percentages at least in the "low teens" over the next few years. Meanwhile the company's pay-per-listing option, set to launch this summer, will help it cater to the needs of most property managers and short-term rental homeowners, he said.

THE SHARES: Up $1.41, or 4.6 percent, to $31.96 in afternoon trading. The stock hit $32.99 earlier in the session, its highest price since November 2011.