Influential Analyst Blodget Sees Rosy Year For Leading Web Stocks
Dow Jones Online News, Wednesday, August 18, 1999 at 15:19
NEW YORK -(Dow Jones)- Influential Merrill Lynch analyst Henry
Blodget on Wednesday upgraded some high-profile Internet stocks, saying
the shares could trade significantly higher.
Blodget upgraded his intermediate-term ratings for Web portal Yahoo!
Inc. (YHOO), but also said leading Internet-service provider America
Online Inc. (AOL), the Excite At Home high-speed Internet-access
service, and popular portal Lycos Inc. (LCOS) stand to benefit from
bustling electronic-commerce activity over the upcoming holidays.
In addition to Yahoo, he also upgraded Internet retailer Amazon.com
Inc. (AMZN) to "buy" from "accumulate" and mentioned barnesandnoble.com
Inc. (BNBN), eToys Inc. (ETYS) and Inktomi Corp. (INKT) as likely
beneficiaries of heightened e-commerce.
Blodget said the eight Internet stocks in his holiday basket could
trade significantly higher, possibly 50% to 100%, by the end of the
year, assuming that investor sentiment is buoyed by rising Web traffic,
autumn investor conferences and "buzz" about electronic shopping.
Blodget said the eight stocks, which are "among the highest-quality
in the industry," are especially attractive because most are off about
50% from their 52-week highs, and the busiest season of the year is
approaching. He noted that leading Internet stocks tripled in value
between August 1998 and January 1999.
Online shopping activity during the 1999 holiday-shopping season will
be two to three times the levels reached in 1998, Blodget predicted.
Leading Web firms will benefit "disproportionately" from this rise, as
well as from the proliferation of cheap or free PCs, which will get more
people online, he said.
Blodget thinks positive sentiment in the fourth quarter will offset
the negative factors that have pushed Web stocks down this summer,
including a seasonal slowdown in Web traffic, a large supply of initial
public offerings, rising interest rates and concerns about industry
bellwether stocks.
He warned that Internet stocks will probably trade "significantly"
below current levels "at some point," given the sector's volatility and
the recent 25% bounce above the lows reached last week. Blodget
recommends that only 5% to 10% of an investor's portfolio be devoted to
pure-play Web stocks and that investors should buy the highest-quality
stocks and hold them long-term.
Blodget set the following 12-month price objectives for the stocks:
AOL, $150; Yahoo, $225; Amazon.com, $150; barnesandnoble.com, $30;
eToys, $50; Excite@Home, $50; Inktomi, $150; Lycos, $75.
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