Yahoo! ( YHOO) is trading toward the low end of its historic valuation range and looks poised to benefit from strength in branded advertising and paid search, UBS said in upgrading the stock to buy from hold Thursday. The brokerage set a price target on Yahoo! of $39, which represents an enterprise value of 20 times UBS's estimate of 2007 earnings before interest, taxes depreciation and amortization. Yahoo! closed Wednesday at $30.75, down 22% from the start of the year. UBS sees the online advertising market expanding by as much as 30% in coming years, with Yahoo! uniquely positioned to gain market share and grow at a faster rate than most competitors. The main stock catalysts are strength in paid search and branded advertising, UBS said, plus Yahoo!'s stellar record with respect to estimates. "Yahoo has 'beat and raised' estimates after the first quarter each of the past three years, and the stock has responded accordingly," UBS said. "While we are not necessarily pounding the table on 1Q results, we do see it as in line or better. Importantly, we also think that given strength in branded advertising, Yahoo will likely have increased visibility into full year guidance versus previous 1Q results." The stock added 55 cents, or 1.8%, to $31.30 in premarket trading.