Yahoo Rises as Merrill Turns Bullish
Yahoo (YHOO) shares are on the rise this morning after Bank of America/Merrill Lynch (BAC) analyst Justin Post lifted his rating on the stock to Buy from Neutral, increasing his price target to $19, from $17.
Post describes Yahoo as “a growth company which is now trading like a long-term secular decliner.” He contends that Yahoo’s user traffic continues to perform at or above the Internet as a whole, with U.S. users up 12 percent in July, compared to a 3 percent increase for the Internet as a whole.
Post says a turnaround in display advertising will likely lag behind the search sector, but he contends the stock at 4.6x estimated 2010 EBITDA “is pricing in long-term declines, not an ad market recovery.”
