Yahoo shares rose nearly 5 percent by midday today on reports that Smith Barney upgraded the stock to a “buy,” citing strong cash flows from Yahoo-branded Web sites.
Rueters reports that cash flow from Yahoo’s own Web sites is set to grow more than 50 percent this year and expand at a 35-percent rate in 2005 and 2006, analyst Lanny Baker wrote in a note to clients. Yahoo’s Overture Pay Per Click Advertising company as well as the new Yahoo Paid Inclusion model should help to drive this revenue.
“We expect that as 2004 progresses, investors will begin to better understand the internal dynamics of Yahoo’s new business model — vertically integrated in search, the leader in traditional Internet advertising, expanding and recurring revenue in the fees line,” Baker wrote.
In other reports, First Albany Capital also raised its rating on Yahoo shares to “buy” from “neutral,” citing positive trends in online advertising and better demand for its broadband services.
