A confluence of catalysts, including the growing popularity of broadband cable and surprisingly strong online advertising, justify valuing Yahoo! ( YHOO) above its Internet peers, analysts argued Monday.

Technology boutique SoundView upgraded the stock to outperform and set a $35 price target Monday, saying Yahoo! is in an Internet "sweet spot" that also reflects increased e-commerce activity and higher revenue from its core search technology.

The shares were recently up $1.01, or 3.5%, to $29.73 Monday.

SoundView noted several other positive trends, including Yahoo!'s ability to generate "significant market share gains" in its online search and branded advertising initiatives; an ability to beat cash flow estimates via revenue growth and cost controls; and an ability to make strategic acquisitions without significant equity dilution.

"If, as we believe, the trends in the Internet sector and for Yahoo! continue into 2004, then valuation becomes the primary issue for investors," SoundView wrote. "In a sense, there is a significant amount of upside already anticipated." However, "We believe Yahoo! will continue to post significant upside to guidance and to investor expectations throughout the rest of 2003 and into 2004," justifying a valuation premium, SoundView wrote.

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