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An analyst advised investors on Wednesday to get bullish on Yahoo! shares, but cautioned that the company still faces rough times.
In a note on Wednesday, RBC Capital Markets analyst Jordan Rohan reiterated at “outperform,” saying shares of the Internet company are “at or near a trough now and should improve within the next 12 months.” The analyst lowered the target price by $1 to $30.
Yahoo! (nasdaq: YHOO - news - people ) shares fell 1.2%, or 31 cents, to $26.10 in early Wednesday trading.
Rohan said Yahoo! has turbulent times ahead with the loss of some advertising business to Google (nasdaq: GOOG - news - people ), the launch of its new ad program Panama slated for January and the major management shuffle that happened a few weeks ago.
“By the time the company officially offers guidance, on or around Jan. 23, we believe the expectations will have reset and that the shares will have bottomed,” Rohan wrote.
In early December, Yahoo! restructured its business into three units, assigning a top executive to spearhead each one, attempting to allay pressures from Google. Rohan said this move will prove wise once the dust settles.
However, Yahoo! is losing business to its rivals. Recently, Yahoo! failed to score a deal with Daum Communications, a Korean Internet portal interested in Google’s AdSense system. Analysts have estimated that Daum would’ve contributed $13 million to Yahoo in 2007.
“Throughout 2007, there will be several other search affiliates currently evaluating options and thinking about the potential upside from switching to Google,” Rohan wrote.
The enticement for businesses to stick with, or even join, Yahoo! might be the planned launch of Panama, a program designed to combat Google’s AdSense.


“Investors should expect Panama to be a positive in the second half of 2007, a bit later than most currently anticipated," wrote the analyst.