Sector Snap: Yahoo leads most major Web stocks down
NEW YORK—Shares of major Internet stocks mostly declined Monday, with Yahoo Inc. falling far ahead of the sector, after Microsoft Corp. withdrew its bid for the struggling search-engine company.
Yahoo sank $3.85, or 13.5 percent, to $24.83. In the past year, the stock has traded between $18.58 and $34.08, rising dramatically after Microsoft's unsolicited bid was announced on Feb. 1.
On Saturday, the world's largest software company withdrew its $47.5 billion unsolicited bid for Yahoo after the companies could not agree on a sale price.
Some analysts reacted by downgrading their ratings for Yahoo's stock, including Canaccord Adams analyst Colin Gillis, who cut his rating to "Sell" and dropped his price target to $21 from $35.
Gillis said that the withdrawal could lead Yahoo's stock to trade down to around $23 per share.
"We point out that the Microsoft bid has served as a much-needed catalyst for Yahoo -- the company is acting with new urgency to drive innovation, open its platforms, control its costs, and renew team spirit," he said.
Meanwhile, shares of Yahoo rival Google Inc. rose $9.41 to $590.67, as some analysts predicted the Web search leader could benefit from Microsoft's and Yahoo's failure to reach a buyout agreement.
Stifel Nicolaus analyst George I. Askew raised his price target for its shares to $675 from $610 in a client note.
"The terminated Microsoft/Yahoo negotiations eliminate the risk for now of a stronger online advertising competitor to Google, and Google stands to benefit modestly if and when Yahoo outsources a portion of its sponsored search advertising to others," he said.
Elsewhere in the sector, shares of online retailer Amazon.com Inc. fell 64 cents to $76.67, while shares of online auctioneer eBay Inc. declined 11 cents to $31.
Deutsche Bank analyst Jeetil Patel reiterated his "Sell" rating and $21 price target for eBay shares in a client note. The analyst said a slowing e-commerce and consumer spending environment, changes to eBay's business model, execution risk and structural problems lead to significant near-term risk.
Shares of Internet conglomerate IAC/InterActiveCorp rose 11 cents to $21.60.
