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Investors ignore analysts, for now

By Bambi Francisco, CBS.MarketWatch.com
Last Update: 11:29 AM ET Jan 10, 2005

SAN FRANCISCO (CBS.MW) -- With earnings season just around the corner, sell-side analysts seem to be playing catch-up.

J.P. Morgan, Bear Stearns and American Technology Research released positive notes on Internet strocks Monday, projecting positive revenue surprises in the fourth quarter.

But given the strong holiday quarter in Net shares, investors were slow to respond to the notes, as they sought instead news that would justify the high prices, like continued fundamental strength into 2005.

Google (GOOG) rose better than half a percent in recent trading. But the stock had slipped slightly to $193 at the start of the day. J.P. Morgan analyst Imran Khan released a note that said Google should beat analysts' consensus fourth-quarter sales forecast.

Accordingly, Khan upped his sales projection to $590 million, slightly higher than Street revenue projections for Google of $584 million. Khan, however, raised his earnings estimate only to meet the current consensus profit forecast of 72 cents.

American Technology Research analyst Mark Mahaney was bolder with his profit call. He said he expects Google's earnings to hit 81 cents.

He's also looking for 36 cents on eBay, or 2 cents above the consensus estimate.

EBay (EBAY) rose better than 1 percent to just under $108. But it was a slow start. Bear Stearns raised its price target to $124 per share. Analyst Robert Peck raised his fourth-quarter revenue estimate to $954 million and his profit forecast to 34 cents a share. EBay is estimated to earn 34 cents on revenue of $928 million. At least one analyst expects eBay to generate sales of $941 million and earnings of 36 cents.

Yahoo (YHOO) rose nearly 1 percent to $36.26 in Monday trades. Yahoo kicks off the sector's earnings season when it reports next Tuesday, Jan. 18.

On Monday, CEO Terry Semel is expected to speak with investors at the Smith Barney Media conference.

American Technology Research's Mahaney told his clients that he expects Yahoo to post better sales results than Wall Street expects. He said he believes Yahoo will generate sales of $765 million versus the Street consensus of $754 million, up 47 percent from the same period a year ago. His number, however, is still below the high sales estimate on Yahoo of $770 million.

Mahaney said he expects Yahoo to post a profit that's in line with the consensus forecast of 11 cents, up 97 percent from a year before.