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An improving online advertising market and growing opportunities in the paid-search space mean more potential upside for



shares, an analyst said Monday.

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Deutsche Bank maintained a buy rating on the stock and raised its price target to $48 from $44, an estimate that represents a price-to-cash-flow multiple north of 35 when balance sheet cash and a minority equity stake are added back. Yahoo! closed Friday at $42.99 and is currently crossing at $43.68 on the Instinet premarket session.

Deutsche makes a market in Yahoo!'s stock but isn't currently one of its investment bankers.

"Business momentum at Yahoo! appears to be accelerating," Deutsche wrote. "Our conversations with agencies, advertisers and online publishers indicate that the online ad market is poised to grow by up to 30% over the next two to four quarters. Yahoo! appears well positioned to benefit from rapidly growing momentum in the core branded advertising business, as well as incremental opportunities in the paid search business."

Deutsche raised its estimate of 2004 revenue to $2.21 billion from $1.96 billion, and raised its estimate of 2004 earnings before interest, taxes, depreciation and amortization to $773 million from $707 million.