Investing

Expected Share Price Gains on Some Internet Stocks (GOOG, YHOO, AOL, LNKD, MWW, DMD, RATE, TST, BIDU)

Over the past month, a number of internet stocks have received new target prices from analysts. We’ve seen five targets rise: Google Inc. (NASDAQ: GOOG), LinkedIn Corp. (NASDAQ: LNKD), AOL Inc. (NYSE: AOL), Baidu Inc. (NASDAQ: BIDU), and Bankrate Inc. (NASDAQ: RATE). Two have seen target prices drop: Demand Media, Inc. (NYSE: DMD) and Monster Worldwide Inc. (NYSE: MWW). Two others that we keep an eye on, Yahoo Inc. (NASDAQ: YHOO) and TheStreet Inc. (NASDAQ: TST) have remain unchanged.

It’s no surprise that Yahoo’s target price hasn’t changed, given the maelstrom surrounding the company and its bevy of potential suitors. TheStreet’s dividend yield, currently 6.3%, virtually guarantees investor satisfaction, even though the share price is down more than -9% in the past month.

Among those with higher target prices, Google’s median target price rose to $730.00, up just slightly from its previous level of $727.50, and LinkedIn’s median target price rose $4.00, from $88.00 to $92.00. In the past month, Google’s share price is off less than -1%, while LinkedIn’s has fallen -35%. The potential upside on Google stock is 25.1% and the potential upside on LinkedIn is 59.8%.

LinkedIn’s share price suffered from the end of the lock-up period that prevented insiders from selling shares. Another batch of locked up shares are due to be released in February, and there won’t be much improvement in LinkedIn’s share price until that date is passed.

AOL’s median target price has risen $1.00, from $17.00 to $18.00, and Baidu’s target has gone up from $191.00 to $192.40. Current share prices for both are lower compared with a month ago, and the implied upside on AOL stock is 30.3% while the implied upside on Baidu is 52.9%. Bankrate’s target has risen from $21.50 to $22.00, and its share price is also up more than 9% in the past month. The potential upside on Bankrate shares is 21.2%.

Demand Media’s median target price fell from $15.00 to $12.00, although its current share price is 7.7% higher than a month ago. The potential upside in Demand Media’s shares is 72.7%. Monster Worldwide’s target price fell from $15.00 to $11.75, and its current share price is -22.1% lower than it was a month ago. The potential upside at Monster is 69.1%.

With the exception of TheStreet, none of these companies pays a dividend.

We explained a while ago why we think that Baidu is a better play than Google or even Apple Inc. (NASDAQ: AAPL), and nothing but a few decimal points have changed since then. The company’s potential more than justifies its high upside.

Paul Ausick