Yahoo! (Nasdaq: YHOO) gained US$2.62 to$15.06 in morning trading Thursday after Lehman Brothers analyst HollyBecker raised her rating on the stock, saying the price has gotten lowenough for investors to “jump in.”
Becker upgraded Yahoo! to buy from market perform, and said she expects thestock to reach $20 in a year.
“We are now convinced that the worst is over,” she wrote in a research note.
Yahoo! shares have dropped more than 90 percent from their high and the company’s marketcapitalization has fallen by more than $100 billion as the Internetadvertising market fell through the floor.
The company is replacing its chiefexecutive and working to diversify its revenue sources to rely less onadvertising. On Monday, Yahoo! said it would begin charging monthly feesfor premium financial content.
“A new CEO will have myriad options to monetize Yahoo’s valuable platform and re-accelerate growth,” Becker wrote. The company, she said, has a”world-class brand, a loyal customer base, and a superior technology platform.”
Becker acknowledged that “this may not be the absolute bottom” for Yahoo’searnings or stock price.
“However, if we wait for evidence of a turnaround,it will almost certainly be too late,” she wrote.
Becker said Yahoo’s first-quarter results, due out April 11th, are”unlikely to have many surprises.” A month ago, the company lowered itsoutlook for the quarter.
“We believe that estimates are finally low enough and that the valuation hasbecome much more reasonable, with the stock trading at less than $13 pershare,” Becker wrote. “Furthermore, we think that the downside on the stockis protected by the likelihood that the company is sold at or above thecurrent price.”