Benchmark Co. analyst Clayton Moran this morning reduced his rating on AOL (AOL) to Hold from Buy, while keeping his $25 price target, in line with Friday’s close at $25.03.
“Our Q3 channel checks indicate that premium display advertising rates have softened slightly from the 10% year-over-year improvement seen in [the first half] in the domestic market,” he writes in a research note. “July was a somewhat disappointing month for display advertising, but August seems to have come back a bit. Momentum has slowed. We believe display growth, after accelerating during [the first half], has now flattened.”
Moran adds that AOL will need to show more tangible evidence of a turn around for the stock to outperform the market from here. And he says that “given AOL’s sales force restructuring and our Q3 channel checks,” AOL’s Q3 results “will not act as a positive catalyst for the stock.”
AOL today is down 88 cents, or 3.5%, to $24.15.
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