Ahead Of The Bell: Yahoo Upgraded At Citi

NEW YORK (AP) — Yahoo Inc.'s stock is trading below the company's value given its stabilizing market share and improved management, a Citi Investment Research analyst said Monday as he upgraded the Internet search company.

Citi analyst Mark Mahaney raised his rating to "Buy" from "Hold" and increased his share price target to $21 from $15.

Mahaney said that despite a 34 percent rise in Yahoo's share price year-to-date, the company has still underperformed big Internet and media stocks since the market began climbing from March lows.

He said the lag is unjustified given Yahoo's share of search queries, and online advertising has stabilized over the past few quarters.

Mahaney also pointed to a more focused management team. Carol Bartz took the job of chief executive in January and last week hired Tim Morse from Altera Corp. to serve as the Sunnyvale, Calif.-based company's chief financial officer.

"Our view at the time of her hire was that CEO Bartz brought the necessary organizational skills and experience to turn around Yahoo," he said. "Based on our checks, Bartz's work force reductions, organizational realignments, and CFO selection have all added to improved management focus.

"Although we view the likelihood of a major transaction as unlikely near-term, we continue to view (Yahoo) as the only logical long-term acquisition target for any company seeking scale in Internet advertising," the analyst added.

Shares of Yahoo finished Friday's trading at $16.40.