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HolidayBuyer's Guide
Tech Industry

AOL gets thumbs-up from brokerage firm

America Online Inc. (NYSE: AOL) shares closed up 8 3/4, or 9 percent, to 109 7/8 Tuesday and might be headed for another monster run-up after BancBoston Robertson Stephens reiterated its "strong buy" recommendation.

BancBoston Robertson Stephens analysts said late Tuesday that AOL has seen some resolution over the last few days over concerns about market share and subscriber growth as well as international competition and pricing and free services issues.

In a research report, BBRS also noted a significant upside potential for AOL as Shop@AOL's first eCommerce holiday shopping season approaches.

AOL shares had fallen below $85 a share last week.

Last week, EarthLink (Nasdaq: ELNK) and MindSpring (Nasdaq: MSPG) announced they would merge this week, creating an even larger independent competitor for AOL to battle.

Whatever the reasons, most analysts contend this stock has been ridiculously oversold.

Last week, PaineWebber analyst Jim Preissler fired off a research note in which he not only set a 12-month price target of $215 a share, but also valued the sum of AOL's parts at $224 a share.

"To remain on the conservative side though, we are staying with our current 12-month price target of $215," Preissler said.

For its part, AOL said it's on pace to set a record in terms of net subscribers added. That's saying something for a company that already had, at last count, more than 17.6 million registered subscribers.

Most analysts were expecting AOL to add another 850,000 subscribers this quarter. But AOL is now saying it will exceed the 950,000 subscribers it added in the year-ago quarter. In addition, CompuServe has already added more than 300,000 subscribers this quarter.

First Call consensus expects AOL to earn 13 cents a share in its first quarter and 61 cents a share in the fiscal year.

Of the 45 analysts watching the stock, 41 maintain either a "buy" or "strong buy" recommendation.