AOL Rated A "Buy" By UBS


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A company that many people expected to fade away as dial-up connections became more and more obsolete will do just fine, according to a respected financial services firm.  This morning, analysts at UBS labeled AOL's stock a "Buy."

That rating coincides with a price target of $25, which isn't bad considering the stock closed at $18.97 yesterday.  Indeed, the target works out to a predicted increase of 31.78 percent, and that seems almost sure to beat the performance of the Dow and Nasdaq given all the recent economic turmoil.

So if the rise occurs in real life, it seems AOL shareholders will need to credit the controversial decision(s) to run huge ads and buy popular sites like TechCrunch and the Huffington Post.

According to Eric Savitz, a pair of UBS analysts reasoned in an official note, "Though we expect continued declines in the subscription business, we believe AOL's strategy around premium content and high quality ads should benefit domestic display growth."

In any event, this upgrade comes at a good time for AOL in terms of PR.  People who expected CEO Tim Armstrong to turn AOL into a huge success overnight have been less than impressed by his leadership, and frequent rounds of layoffs have damaged morale within the company.

Now AOL has something big to show critics and investors: thanks to UBS's decision, the company's stock is up an impressive 4.27 percent so far today, even though the Dow is down 0.20 percent and the Nasdaq has fallen 0.60 percent.