>>NEW YORK - Merrill Lynch & Co. analyst Henry Blodget said holiday shopping will boost Internet sales and recommended shares of eight companies, including Seattle-based Amazon.com, sending their shares sharply higher.
Revenue from online purchases and advertising could double or triple from the level of last year's holiday season, Blodget said. No. 1 online bookseller Amazon.com and top Internet service America Online stand to reap the biggest share, he said.
The eight stocks could trade 50 percent to 100 percent higher by year's end, Blodget said. He also recommended that investors buy eToys, Excite At Home, Lycos, Inktomi and Barnesandnoble.com.
These stocks "offer a sound way to play the fundamental strength and renewed investor enthusiasm we expected to see during the fall and holiday shopping season," the widely followed Internet analyst wrote in a report to clients.
The stock of all eight companies climbed today, with Amazon.com rising $7.313 to $116.563, Yahoo! gaining $8.938 to $146.813, and AOL climbing $3.188 to $100.688.
Online toy retailer eToys was the biggest gainer, surging $5.438, or 13.5 percent, to $45.688.
Online holiday purchasing and advertising could generate two to three times as much business as it did last year, with No. 1 online bookseller Amazon.com and top Internet service AOL gaining a lion's share of those dollars, Blodget said.
"Although we are still marooned in August, Santa's sleigh ride is only five months away - and this year, we think he'll be doing a lot of his shopping online," Blodget wrote.
Blodget's forecast comes as Internet stocks already were rising because of rosy predictions for the holiday shopping season. Through yesterday, the Bloomberg Internet Index has increased 19 percent since Aug. 9.
Companies that sell on the Web are expected to see sales rise to $36.6 billion this year from $14.9 billion last year, according to a study published last month by the Boston Consulting Group.
Blodget is one of the most widely followed Internet analysts. He came to prominence in December after he predicted Amazon.com could reach $400 a share within 12 months. Shares of the No. 1 online bookseller surged after his forecast, and reached his $400 price target in early January.
Before today's climb, Amazon.com's shares had dropped 21 percent since Jan. 6, and tumbled 48 percent since its high on April 23 of $210.125.Amazon.com's shares split three for one on Jan. 5.
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