Shares of internet media company Yahoo surged to an almost three-year high, the day after it posted a quarterly profit that more than doubled and raised its forecast for the remainder of the year on stronger gains by its core advertising business.
Yahoo shares were up more than 12 per cent in yesterday's afternoon trade on the Nasdaq to a level not seen since January 2001, when the stock began declining in the wake of the collapse of the internet bubble.
Driven by renewed strength in the online advertising market, the red-hot sponsored search business and premium services like internet access and job boards, Yahoo has rebounded and begun posting better results than it did during the heyday of the late 1990s.
In addition to the stronger-than-expected third-quarter earnings, Yahoo said its fourth-quarter and full-year results would be boosted by the acquisition of internet advertising company Overture Services. That deal closed on Tuesday.
Wall Street analysts cheered the results, which also helped boost shares of other internet search companies such as Ask Jeeves, FindWhat.com and LookSmart.
US Bancorp Piper Jaffray raised its rating on Yahoo to "strong buy" from "outperform", and DB Securities raised its rating to "buy" from "hold".
"We believe Yahoo's stock has significant upside in it, given its inflection point in revenue and margin growth, Yahoo's increasing market share and the conservative guidance," US Bancorp analyst Mr Safa Rashtchy said.
He raised his price target on the stock to $50 from $42.
But while other analysts shared Mr Rashtchy's optimism about Yahoo's strength, they also raised questions, as they have in the past, about the stock's valuation and whether it reflected too much optimism on best-case goals for the company.
Yahoo shares rose $3.96, or 10.2 per cent, to $42.75 after hitting a session high of $43.72 on the Nasdaq, where it was among the most active issues. - (Reuters)
