and Yahoo receive downgrade
a slowdown in online advertising, an analyst downgraded
the stocks of search giants Google and Yahoo on Thursday.
Shares of both companies fell roughly 5 percent each
in late morning trading, pushing Yahoo to $30.49 a share
and Google to $185.25. The broader markets, however,
were up during morning trading.
"We had hoped that momentum in paid search from
the fourth quarter would carry through to first-quarter
results," Jordan Rohan, an analyst with RBC Capital
Markets, said in his research note on Yahoo. "But
now we believe otherwise."
Rohan, citing checks with the companies' channels for
selling online ads, downgraded Yahoo to the equivalent
of a "hold" from a "buy." And he
downgraded Google to the equivalent of a "hold"
from a "strong buy."
In the case of Google, Rohan projected the company would
increase its first-quarter revenue 5 percent from the
previous quarter, rather than the 13 percent jump he
previously forecast. Wall Street expects the company
to generate a 13 percent increase.
Earlier in the week, David Garrity, an analyst with
Caris & Co., downgraded Google to a "buy"
from a "strong buy," according to Thomson
Financial. Garrity had also cited similar concerns in
his research note.
"We view Google as likely to remain the paid search
advertising leader and stand by our financial projections,"
Garrity said in his research note. "That said,
however, we see few near-term catalysts likely to drive
Garrity pointed to preliminary fourth-quarter industry
figures released on Tuesday by the Interactive Advertising
Bureau, which cited revenue figures from online ads
that were below his industry projections for the three-month
The bureau estimated fourth-quarter revenue of $2.7
billion, while Garrity had expected the industry to
generate $3.34 billion in revenue for the quarter.
That said, a number of industry analysts recently upgraded
Yahoo and Google after the companies reported their
fourth-quarter results. Yahoo posted stronger-than-expected
earnings for the quarter, as did Google.
According to Thomson Financial, three analysts have
upgraded Google since it reported its fourth-quarter
results Feb. 1, compared with the two downgrades. Yahoo
received four upgrades and one downgrade after it reported
fourth-quarter results in mid-January.
Back to Archive >>