Digest: Yahoo upped; EA on buy list
Citi Investment Research on Tuesday raised its rating on shares of Yahoo from "hold" to "buy," arguing that it is likely that Microsoft will raise its $31 per-share offer for the Internet firm. The brokerage also raised its price target on Yahoo's stock by $3 to $34. "While we continue to see no other competing bidders, we believe Yahoo is aggressively pursuing strategic alternatives," analyst Mark Mahaney said in his report. One possible other scenario he mentioned is a deal with Time Warner that could combine the conglomerate's online content assets with Yahoo in exchange for a stake. "This could serve as a forcing function to a higher Microsoft bid," the analyst said. Yahoo shares closed up 4.4% at $28.73
EA on buy list
Electronic Arts has been added to the Goldman Sachs Conviction Buy List, boosting its stock 1% to $50.18 on Tuesday. Goldman analyst Mark Wienkes argued that the shares have declined about 10% during the past six months because of "poor execution and resultant share losses." However, industry growth and new game releases should help the stock, he said. Wienkes thinks the stock also already reflects a likely increase in EA's $26 per-share takeover offer for Take-Two Interactive Software.
Citi Investment Research on Tuesday upgraded shares of THQ to "buy," citing the stock's 26% decline year-to-date. "Poor sales of key fiscal year 2008 games 'Ratatouille,' 'Stuntman,' 'Juiced' and 'Conan' caused significant negative fiscal-year 2008 earnings revisions," analyst Brent Thill said in a report. "Recent management additions to help drive new intellectual property creation and tighten product quality processes should help address game quality issues." THQ shares closed up 3.5% at $21.67.