Sector Snap: Major Web Companies Gain

Sector Snap: Major Web Companies Gain

Sep 4, 2007

NEW YORK - Shares of major Internet companies traded higher Tuesday, with Yahoo Inc. rising after a Bear Stearns analyst named the company a "top pick."

Yahoo (nasdaq: YHOO - news - people ) shares gained $1.24, or 5.5 percent, to $23.97 in afternoon trading. In the past year, Yahoo has traded between $22.27 and $33.61.

In a Tuesday note to clients, Bear Stearns (nyse: BSC - news - people ) analyst Robert S. Peck said that while the company "still has plenty of challenges remaining and is clearly not out of the woods," its shares are attractive to investors who are willing to wait for growth plans to come through with positive results.

The analyst reiterated his "Outperform" rating and $30 price target for the stock.

Meanwhile, competitor Google Inc. (nasdaq: GOOG - news - people )'s shares added $8.12 to $523.37.

In a note to clients Tuesday, Stifel Nicolaus analyst George Askew said speculation "continues to run rampant" that Google will introduce a Google Phone in the next few weeks.

The analyst, who holds a "Buy" rating and $620 price target on the shares, said he doesn't think Google wants to make or sell a handset, but work with handset makers and wireless service providers to bring consumers an optimized handset.

"Google's payback is in the form of consumer usage of its mobile applications such as Google Search, Gmail, Google Maps, Google Talk and Google Calendar among others, which the company can monetize through advertising," Askew wrote.

A Google spokesperson could not immediately be reached for comment.

Askew thinks that in the long term Google is interested in increasing its control over consumers' mobile Internet access in very regulated and mature markets like the United States. Four years from now, the analyst thinks Google could bring in $5 billion or more in mobile advertising revenue.

Elsewhere in the sector, shares of online retailer Amazon.com Inc. (nasdaq: AMZN - news - people ) added $2.78, or 3.5 percent, to $82.69. In the past year, the stock has traded between $29.90 and $89.

On Friday, the online retailer's shares rose after a report in the New York Post cited "sources familiar with the situation" as saying the company's planned digital music store might launch in September. Amazon said in May it would launch a service sometime this year that sells songs without copy protection limits.

At the time, Amazon spokesman Drew Herdener said the company doesn't comment on rumors or speculation.

Shares of online auctioneer eBay Inc. (nasdaq: EBAY - news - people ) added 60 cents to $34.70 in afternoon trading.

In a Tuesday client note, Deutsche Bank (nyse: DB - news - people ) analyst Jeetil Patel said he believes the company's Germany listings are still weak, its British listings are slowing down and U.S. listings are generally declining, all of which have contributed to an overall listings decline of 4 percent year over year.

He thinks eBay "faces fundamental challenges in generating demand," adding that the possibility of a share buyback provides some downside support for its stock.

Source: forbes.com