Big Day for AOL Shares

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The words "modest revenue growth" typically don't inspire investor confidence. In AOL's ( AOL ) case, however, they were enough to give the surging stock another 8.4% boost today.

A Barclays analyst upgraded AOL from "overweight" to "equal weight", raising his target price to $44 from $38. The stock is currently trading at $39 after today's big move.

Wednesday's advance is just the latest pop in what has been a resurgent year for a company once all but given up for dead. AOL shares have risen 30% in 2013. But the stock's rally dates back much further than that.

After bottoming out at less than $12 a share in October 2011, AOL shares have more than tripled. A $1.1 billion patent sale to Microsoft ( MSFT ) last April provided a nice boost. A special dividend in late August helped matters even more. Now the stock is approaching a five-year high.

Not surprisingly, the woefully outdated dial-up side of the business is in steady decline. I doubt many of you reading this article are doing it using your dial-up AOL Internet service.

However, the company managed to offset its dying subscription business by ramping up its advertising business. The company posted its first revenue growth in eight years last quarter. At least one Barclays analyst thinks that growth is sustainable.

For now, that was enough to give AOL shares another kick in the pants.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: AOL , MSFT

Wyatt Investment Research

Wyatt Investment Research

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