Holiday Forecast Lifts Net Stocks

Amazon.com Inc., America Online Inc. and six other Internet companies got a boost Wednesday after their stocks were recommended by Merrill Lynch & Co. analyst Henry Blodget, who said they’re poised to benefit from stronger holiday e-commerce and advertising sales.

Blodget shot to prominence late last year with his correct, bullish call on Amazon.com. But he has recommended 18 Net stocks this year, and only five have risen since being tabbed.

Wednesday, Blodget said revenue from online purchases and advertising could triple from last year’s holiday season. No. 1 online bookseller Amazon.com and top Net service America Online stand to reap the biggest share, he said. He also recommended Yahoo Inc., EToys Inc., Excite@Home Corp., Lycos Inc., Inktomi Inc. and Barnesandnoble.com Inc.

“Although we are still marooned in August, Santa’s sleigh ride is only five months away and this year we think he’ll be doing a lot of his shopping online,” Blodget wrote in a report to Merrill clients.

Amazon.com gained $3.88 to $113.13, while America Online rose $1.69 to $99.19. Blodget raised his ratings on Amazon.com and Yahoo to “buy” from “accumulate,” while reiterating positive ratings on the others. Yahoo rose $6.19 to $145.06.

EToys climbed $4.94 to $45.19, Excite@Home added 44 cents to $40.06, Lycos increased $2.44 to $44.75, Inktomi rose $3 to $119 and Barnesandnoble.com climbed $2.50 to $19.25.

But Net shares he didn’t recommend also surged. EBay Inc. soared $8.19 to $125.94, while rival auctioneer UBid Inc. zipped $7.63 to $27.

“I don’t think the Internet rally is attributable to any one person or thing,” said Peggy Ledvina, analyst with Dain Rauscher Wessels. More likely, investors are buying stocks because interest rate fears have subsided, she said.