Although Banc of America Securities analyst Joe Arns gave six newspaper publishers “Neutral” ratings, due to declining advertising revenues, he said the stocks are underpriced.

Arns doled out target prices on shares of U.S. media groups the New York Times Co., E.W. Scripps Co., McClatchy Co., Gannett Co., Lee Enterprises Inc. and GateHouse Media Inc.

“We project the industry ad revenue decline to continue through 2008, given the slump in the real estate and fallout on broader economic activity,” Arns wrote in a client note, according to an article in Yahoo Finance. “We believe the longer-term prospects for the newspaper industry are better than what is implied by current share prices.”

And while initiatives to charge users for online content are paying off more than some had predicted, advertising revenue declines are cyclical, he stated in the note.

Arns gave out the following target prices on shares for the companies: $21 for the New York Times, $51.50 for Gannett, $26 for McClatchy, $43 for E.W. Scripps, $19.50 for Lee Enterprises and $12.50 for GateHouse Media.