UPDATE 1-Friedman initiates Yahoo with underperform

martedì 14 ottobre 2008 16:25

(Recasts; adds details, share movement)

Oct 14 (Reuters) - Friedman Billings Ramsey began coverage of Yahoo Inc (YHOO.O: Quotazione) with an "underperform" rating, citing competition from Google Inc (GOOG.O: Quotazione) and other more focused vertical content companies.

The brokerage, which set a price target of $12 on the stock, said competition should continue to drive share loss and advertising price compression for portals like Yahoo.

"We believe that the development of advertising networks is a double-edged sword for Yahoo," analyst Heath Terry wrote in a note to clients.

Although Yahoo has the scale and technology to succeed as an advertising network, that business is becoming hypercompetitive and less profitable, the analyst said.

The brokerage reinitiated coverage of rival Google with an "outperform" rating and a price target of $533, saying the company is still the best positioned and best managed of any internet company amid the downturn in the economy.

Shares of Yahoo fell 24 cents to $13.25, while those of Google were down 3 percent at $370 in morning trade on Nasdaq. (Reporting by Shrutika Verma in Bangalore; Editing by Deepak Kannan)