Expected Price Gains for Internet Stocks (GOOG, YHOO, AOL, BIDU, DMD, LNKD, MWW, RATE, TST)

LinkedIn (NASDAQ: LNKD) and Monster World Wide (NYSE: MWW) depend on subscriptions for revenue, while Demand Media (NYSE: DMD), Bankrate (NYSE: RATE) and TheStreet (NASDAQ: TST) provide original content surrounded by advertising. In addition to these publicly traded stocks, the internet space also includes social networking company Facebook, social game company Zynga and coupon site Groupon. The latter two have filed for IPOs and both are expected to come public as soon as next month. All the following financial data comes from Yahoo! Finance, unless noted otherwise.

Google has a median target price of $727.50 from 30 brokers. Shortly after noon today, shares are trading at $587.87, for an implied gain of $139.63, or 24%. Google’s forward P/E is 13.45 and the company does not pay a dividend. The stock’s 52-week trading range is $473.02 to 642.96, and at today’s price that is about 24% above its 52-week low, posted earlier this morning, and 9% below the 52-week high. Google reaps nearly $10 billion a quarter in advertising revenues. Only a relatively small portion of that is mobile advertising, but as Google’s best-selling Android mobile operating system continues to spread, the mobile ad revenue could continue its triple-digit growth rate for some time to come.

Yahoo! has a median target price of $18.00 from 23 brokers. Shortly after noon, shares are trading today at $16.33, for an implied gain of $1.67, or 10%. Yahoo!’s forward P/E is 18.55 and the company does not pay a dividend. The stock’s 52-week trading range is $11.09 to $18.84, and at today’s price that is about 47% above its 52-week low, posted earlier this morning, and 13% below the 52-week high. Yahoo! recently fired its CEO and is currently exploring strategic options. Much of the company’s value resides in its nearly 40% share in China’s Alibaba e-commerce site. The stock price is relatively high on the belief that the company will find a buyer willing to pay a premium.

AOL has a median target price of $17.00 from 15 brokers. Shortly after noon today, shares are trading at $14.38, for an implied gain of $2.62, or 18%. AOL’s forward P/E is 84.65 and the company does not pay a dividend. The stock’s 52-week trading range is $10.06 to $27.65, and at today’s price that is about 43% above its 52-week low, posted earlier this morning, and 48% below the 52-week high. AOL recently purchased the Huffington Post properties, which gave the company something of a boost. The high forward P/E speaks volumes about prospects for future earnings. AOL, like Yahoo!, probably is overpriced.

Baidu has a median target price of $191.00 from 26 brokers. Shortly after noon, shares are trading today at $127.89, for an implied gain of $63.11, or 49%. Baidu’s forward P/E is 29.11 and the company does not pay a dividend. The stock’s 52-week trading range is $94.33 to $165.96, and at today’s price that is about 36% above its 52-week low, posted earlier this morning, and 23% below the 52-week high. Baidu’s great advantage is that it is the largest and fastest growing internet company in the world’s most populous country. Sheer numbers are on Baidu’s side for now and for several years to come. The forward P/E may indicate an overpriced stock, but its stock price is still nearly $35 per share below its target price. There’s plenty of room for this one to run.

Demand Media has a median target price of $15.00 from 10 brokers. Shortly after noon today, shares are trading at $6.47, for an implied gain of $8.53, or 132%. Demand Media’s forward P/E is 16.97 and the company does not pay a dividend. The stock’s 52-week trading range is $5.24 to $27.38, and at today’s price that is about 23% above its 52-week low, posted earlier this morning, and 76% below the 52-week high. Demand Media was hit hard by a change earlier this year to Google’s search algorithm and the company has not recovered. The target price here is too high, and the company continues its arguable accounting practice of capitalizing content creation costs and amortizing them over five years. The effect of that practice is to spread costs over a long period, making the company look more profitable than it may be.

LinkedIn has a median target price of $88.00 from 9 brokers. Shortly after noon today, shares are trading at $88.70, or slightly above its target price. LinkedIn’s forward P/E is 277.69 and the company does not pay a dividend. The stock’s 52-week trading range is $60.14 to $122.70, and at today’s price that is about 47% above its 52-week low, posted earlier this morning, and 28% below the 52-week high. LinkedIn went public in May and the lockup period preventing insiders from selling shares expires next month. The question is whether the stock can withstand the onslaught of 50 million new shares hitting the market. That’s more than half the company’s shares outstanding.

Monster World Wide has a median target price of $15.00 from 12 brokers. Shortly after noon today, shares are trading at $8.92, for an implied gain of $6.08, or 68%. Monster’s forward P/E is 12.79 and the company does not pay a dividend. The stock’s 52-week trading range is $6.34 to $25.90, and at today’s price that is about 41% above its 52-week low, posted earlier this morning, and 66% below the 52-week high. Monster reports earnings on Thursday and is expected to post EPS of $0.12, which is higher than the EPS in either of the past two quarters and more than 1000% better than the same period a year ago. There’s a lot of competition in the job placement business, but Monster has a good brand and it appears to have dug itself out of a very deep hole.

Bankrate has a median target price of $21.50 from 6 brokers. Shortly after noon today, shares are trading at $16.65, for an implied gain of $4.85, or 29%. Bankrate’s forward P/E is 22.55 and the company does not pay a dividend. The stock’s 52-week trading range is $13.38 to $18.89. At today’s price that is about 24% above its 52-week low, posted earlier this morning, and 12% below the 52-week high. Bankrate recently spent $65 million to acquire the insurance business insWeb, a lead-generation and marketing company. The company’s stocfk is pretty fully valued, so it’s not the best growth candidate among these stocks.

TheStreet has a median target price of $4.00 from a single broker. Shortly after noon today, shares are trading at $1.85, for an implied gain of $2.15, or 116%. TheStreet’s forward P/E is negative and the company pays a dividend yield of 5.5%, the only company in this group to do so. The stock’s 52-week trading range is $1.75 to $3.64, and at today’s price that is about 6% above its 52-week low, posted earlier this morning, and 49% below the 52-week high. TheStreet’s shares have a lot of room to run, and the only question is whether they will. Revenues have been growing, but there is a convertible preferred stock counterweight. Fortunately for the company, the convertible price is more than $14, so no conversion is likely any time soon. And the company’s 5.5% dividend yield does not appear to be in danger.

Facebook has not announced any plans for an IPO, but based on shares traded on SharesPost, a marketplace for privately held stocks, the company’s valuation is a lofty $75.3 billion. Facebook runs neck-and-neck with Yahoo! as the primary carrier of display advertising. Facebook’s revenue is expected to reach $4.27 billion in 2011.

Social game-maker Zynga is expected to come public before Thanksgiving. SharesPost values Zynga at $11.7 billion today. The company filed for an IPO in July, and is looking to raise $1 billion. The company will trade on Nasdaq under the symbol ZNGA. The company posted revenue of $271.5 million for the first six months of 2011.

Groupon is expected to come public next week, with an offering in which it hopes to raise $510 million at a price of $16 to $18 per share. We have written about Groupon’s narrow moat and other issues, but at the expected IPO price, the company will have a valuation of $11.2 billion.

Paul Ausick