Yahoo! Rises on Lehman Upgrade

Yahoo! (Nasdaq: YHOO) gained US$2.62 to $15.06 in morning trading Thursday after Lehman Brothers analyst Holly Becker raised her rating on the stock, saying the price has gotten low enough for investors to "jump in."

Becker upgraded Yahoo! to buy from market perform, and said she expects the stock to reach $20 in a year.

"We are now convinced that the worst is over," she wrote in a research note.

Yahoo! shares have dropped more than 90 percent from their high and the company's market capitalization has fallen by more than $100 billion as the Internet advertising market fell through the floor.

The company is replacing its chief executive and working to diversify its revenue sources to rely less on advertising. On Monday, Yahoo! said it would begin charging monthly fees for premium financial content.

"A new CEO will have myriad options to monetize Yahoo's valuable platform and re-accelerate growth," Becker wrote. The company, she said, has a "world-class brand, a loyal customer base, and a superior technology platform."

Becker acknowledged that "this may not be the absolute bottom" for Yahoo's earnings or stock price.

"However, if we wait for evidence of a turnaround, it will almost certainly be too late," she wrote.

Becker said Yahoo's first-quarter results, due out April 11th, are "unlikely to have many surprises." A month ago, the company lowered its outlook for the quarter.

"We believe that estimates are finally low enough and that the valuation has become much more reasonable, with the stock trading at less than $13 per share," Becker wrote. "Furthermore, we think that the downside on the stock is protected by the likelihood that the company is sold at or above the current price."