Bernstein Research cut its price targets on five U.S. internet companies, including Google Inc (GOOG.O) and Yahoo Inc (YHOO.O), saying their stock prices have become somewhat detached from the intrinsic valuations of the companies themselves.
"The current dearth of debt financing, especially for private equity transactions has, we believe, untethered internet stock valuations from their fundamentals," the brokerage wrote in a research note. "It is unclear when the resultant downdraft in prices will abate."
The brokerage cut its price target on the shares of Amazon.com Inc (AMZN.O), IAC/InterActiveCorp (IACI.O) and eBay (EBAY.O), apart from Google and Yahoo. However, it maintained an "outperform" rating on all five stocks.
The brokerage projected a growth in U.S. online retail spending of 7.7 percent in 2009 and 12.6 percent worldwide.
It also forecast a growth in U.S. online advertising of 11.1 percent in 2009, and 9.2 percent worldwide.
"We think premium display advertising, however, has deteriorated markedly and will have low single digit growth in 2009 in the United States and approximately 10 percent growth overseas," Lindsay added.
(Reporting by Arup Roychoudhury in Bangalore; Editing by Himani Sarkar)