• by Wendy Davis , Staff Writer @wendyndavis, January 22, 2007

As industry watchers await Yahoo's fourth quarter earnings report, due out tomorrow, brokerage house Merrill Lynch has issued another optimistic report on the company.

"We continue to like the stock," wrote research analyst Justin Post in an earnings preview.

Specifically, Merrill Lynch believes that Yahoo's new paid search platform, Panama, will yield an extra $100 million to $300 million revenue this year. In the next four years, search monetization should improve 70%, predicts Merrill Lynch.

As for branded advertising, Merrill Lynch predicts that the Right Media partnership could add $50 million in revenue to the company this year.

The brokerage house also said it anticipates that Yahoo will report earnings in the upper half of its fourth-quarter guidance. "We expect solid results versus expectations based on relatively positive checks on 4Q online advertising with marketing firms, and healthy Internet eCommerce activity (including search) from comScore and other sources."

Merrill Lynch predicted branded advertising revenue will be up 20% from the last quarter of 2005, with page growth up 21%, but CPMs flat. Last year, Yahoo's fourth quarter revenue soared 40% over 2004's.

This report marks the latest in a string of Merrill Lynch's relatively bullish predictions about Yahoo. In October, when Yahoo was getting pummeled in the media for failing to acquire Facebook and lackluster ad growth, the brokerage house upgraded the stock to "buy." And last month, Merrill Lynch wrote that despite the projected slowdown in Yahoo's revenue growth, the company's premium inventory remained a positive.