March 18, 2004

Cash flow from Yahoo's own Web sites, as opposed to third-party sites, is set to grow more than 50 percent this year and expand at a 35-percent rate in 2005 and 2006, analyst Lanny Baker wrote in a note to clients.

Yahoo Inc. (Nasdaq:YHOO) shares rose nearly 5 percent by midday on Wednesday -- the Web company's biggest daily gain since November -- after Smith Barney upgraded the stock to a "buy," citing strong cash flows from Yahoo-branded Web sites.

Baker raised his investment rating on Yahoo to "buy" from "hold," and boosted his price target on the stock to $60 a share from $50. Yahoo shares were up $2.12, or 4.98 percent, at $44.69 on Nasdaq.

"We expect that as 2004 progresses, investors will begin to better understand the internal dynamics of Yahoo's new business model -- vertically integrated in search, the leader in traditional Internet advertising, expanding and recurring revenue in the fees line," Baker wrote.

First Albany Capital also raised its rating on Yahoo shares to "buy" from "neutral," citing positive trends in online advertising and better demand for its broadband services.

Source: Yahoo News

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