SAN FRANCISCO -- Internet stocks appeared set to follow a tumbling Treasury market after this morning's employment report. But despite strong economic numbers that hurt the sector early, Net stocks have mostly held their ground.
Thursday's rebound has spurred renewed buying interest in the sector and improved the technical outlook, and losses in Treasuries appeared only to be preventing a bigger gain. In recent trading,
TheStreet.com Internet Sector
index was off 0.19 at 513.36 after hitting an early-session low of 501.49.
Contributing to the optimism was a set of positive comments on Net bellwethers from
. Goldman added
to its recommended list and also reiterated its recommended list rating on
. Yahoo! was one of the leading point gainers in the sector, up 5 5/8, or 4%, at 134. AOL was up 4 1/16, or 5%, at 88.
With regard to Yahoo!, analyst Michal Parekh wrote that the broad selloff in the Internet sector "has not differentiated the superior business models from the also-rans," and Yahoo! "is a clear leader in Web portals."
Morgan Stanley Dean Witter
also came out with a note on Yahoo!, resuming coverage with an outperform rating. Morgan was not rating the company previously due to its participation in Yahoo!'s purchase of
. Analyst Mary Meeker wrote that she believes Yahoo! shares should be higher by year-end due to "solid fundamentals momentum and the outlook for a strong fourth quarter," though she could not rule out ongoing near-term volatility.
Goldman's note on AOL indicated that analysis of the company "leads us to conclude that the current stock price overly reflects heightened competition and pricing pressure on subscriptions." He added that by applying an "unlikely" 50% decline in monthly access fees over a four-year period using his model, fair value of the stock was around 80, or where it was currently trading. But applying an accelerated growth scenario yields a 12-month price objective of over 160.
In addition, Goldman had nice things to say about
, saying the analyst day scheduled by the company for Monday "will be upbeat and should serve to bolster positive sentiment for the shares."
Goldman noted that the main focus of the analyst day should be to address concerns about site reliability and recent initiatives on the technology front, and ironically, eBay was having site problems today. The message board at eBay noted that portions of the system were inaccessible as of 8:02 a.m. EDT. An additional note at 9:43 noted that the problems were continuing and the company would be extending auctions and crediting fees in accordance with its policy. Nevertheless, eBay was up 3 1/8, or 4%, at 96.