CNET Networks

magic wand

The Analyst waves his magic wand

Abacadabra. I wish I had power like this! When I checked my Ameritrade account moments after the market opened this morning, I was shocked, simply shocked, to see shares of CNET trading 15% higher than yesterday's close.

CNET chart before and after analyst comment

What caused this overnight transformation in the perceived value of a share of CNET? The usual suspect steps forward: The Analyst.

Shares of CNet Networks (CNET) rallied more than 15 percent after Smith Barney analyst Lanny Baker upgraded his rating on the stock to "outperform" from "underperform" and established a 12-month price target of $8 on the technology-oriented Web site operator. Baker cited his belief that the San Francisco-based company can outpace Wall Street's consensus expectation for 10 percent revenue growth next year. Much of CNet's revenue growth will flow to the bottom line because of cost controls that the company has implemented, Baker said in a research note. CNet's shares ended Wednesday's action at $4.90, implying that Baker foresees potential upside of more than 60 percent.
— Movers & Shakers, 26-Jun-03, CBS.MarketWatch.com
Lanny Baker Lanny Baker (Picture: TheStreet.com)

So who is Lanny Baker anyway? The internet is a marvelous thing! A quick Google search reveals that Lanny Baker:

Psst! Lanny! I've got some other stocks in my portfolio that could use a little help. How about a kind word for—

Or, maybe this opens up a whole new investment strategy: Now let's see, what other stocks are on Lanny's disclaimer list?

This was all well and good, this time, and I'm not disappointed in the least, this time. CNET has been languishing largely in the doldrums since it broke out over the $5.00 level. But what if it had been a negative comment? The stock could as easily have plunged 15%! All by An Analyst waving his magic wand in the press.