• by Joe Mandese  @mp_joemandese, January 11, 2005

Citing "strong" fourth quarter pricing and traffic, the equities research team at Merrill Lynch Tuesday upgraded its outlook for Yahoo!. The securities firm boosted its estimates for Yahoo!'s fourth quarter revenue to $760 million from an earlier forecast of $742 million, which would represent a sequential growth rate of 16 percent, an improvement from Merrill Lynch's earlier projection of a 13 percent rate of growth.

In her research note, Merrill Lynch analyst Lauren Rich Fine attributed the upgrade primarily to stronger indicators for Yahoo!'s ad pricing. "This revenue estimate was based on increasing our estimate of cost-per-click sequential growth from 4 percent to 11 percent and our CPM year-over-year growth from 17 percent to 20 percent," she wrote.

Despite the upgrade, the Wall Street firm left it's "neutral" rating for Yahoo!'s stock due to its relatively high market valuation.