Yahoo spreads good cheer
Brokers raise estimates; auspicious start to season
By Bambi Francisco, CBS MarketWatch
Last Update: 5:24 PM ET Jul 9, 1999
Internet Daily
Net Headlines
SAN FRANCISCO (CBS.MW) -- Internet stocks got a lift Thursday as
Yahoo's stronger-than-expected quarterly results set the stage for a round
of positive reports from the cyber group.
"The important thing to remember here is the implications for the entire
sector," said Alan Braverman, Internet analyst at Banc of America
Securities, who upgraded his Net sector opinion three weeks ago from a
"tepid" buy to a much stronger overall opinion.
His reasons were largely based on expectations of an earnings surprise in
the calendar quarter for the sector and that Yahoo's results would be the
"touchstone" for the "upswing" in the quarter.
"As Yahoo goes -- so goes the sector," he said. "And Yahoo came
through as expected."
Also as expected, shares of Yahoo's stock (YHOO: news, msgs), after
surging as high as 175 1/4 at one stage, eased by midday and finished
down 2 5/8, or 1.6 percent, to 164 7/16. Yahoo shares have closed
lower by an average of 3.7 percent the day after it releases earnings seven
out of the last eight reporting periods, according to LimResearch.com.
(Watch a video of CBS.MarketWatch.com's interview with Yahoo
CEO Timothy Koogle. 28.8 version.)
"It could be a
rotation," said James
Glickenhaus at
investment firm
Glickenhaus & Co.
"The investors who
rode the stock from 6
to 244 and saw it go
back down to 117
without getting out are saying I'm not having a heartache and put myself
through this again. So, it's 170 -- goodbye."
But there's new buyers coming in as well, said Glickenhaus, who's
impressed with Yahoo's performance earlier in the day. "It's quite
remarkable given the expectations."
"It (Yahoo) is spectacular and it's a Rembrandt, but that's not to say it isn't
cheap," he added.
After the market closed Wednesday, the Santa Clara, Calif.-based Net
portal company (YHOO: news, msgs) said it earned 11 cents a share in
its fiscal second quarter, vs. the First Call consensus estimate of 8 cents.
Sales for the quarter hit $115.2 million, soaring past the $45 million
recorded in the year-ago period.
According to First Call, 15 analysts reiterated their "buy" rating and seven
reaffirmed their "strong buy" rating. See earnings story.
Bruce Smith, an analyst at Jefferies & Co., reaffirmed his $300 price
target on the Internet darling.
"Because Yahoo is both the leading pure-play portal
company and the first in its sector to report earnings, we believe the
company's earnings announcement affects investor sentiment toward all
related Internet stocks," said Smith, the Jefferies analyst.
Yahoo's results also reflect the willingness on the part of advertisers to
increasingly spread the ad budgets online. Leading online advertising
solutions company DoubleClick (DCLK: news, msgs) jumped 3 11/16,
or 3.8 percent, to 100 7/16. |
