AOL Shares: Buy or Sell? (Video Included)

Submitted by Frank Lara Jr on Fri, 03/04/2011 - 17:27

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Financial News

AOL Inc. (NYSE:AOL) shares are trading flat today at $20.16 and some bad news for their employees was dropped today. More layoffs.

The company said the pink slips aren't coming until after the $315 million Huffington Post (one of our favorite sites) acquisition closes, they say - though they will happen, maybe a few seconds after that. AOL's last layoff was a slashing of 2,300 jobs a year ago.

Wall Street's price targets on AOL are a mixed bag and we believe there is little hope at this point in the game. If only you could buy shares in just the Huffington Post.

AOL shares have fallen 25% since its $27 IPO last year. The recent analyst estimates for AOL shares range from high to low:

CO.	Current Price	Price Target	% Change
AOL	$ 20.18	$ 20.00	-0.9%
AOL	$ 20.18	$ 24.00	18.9%
AOL	$ 20.18	$ 25.00	23.9%
AOL	$ 20.18	$ 21.00	4.1%

		Average	11.5%

Last Friday (Feb 28th) Canaccord Genuity initiated coverage on shares of AOL (AOL) with a “hold” rating and a $20 price target on the stock.

On Feb 27th UBS AG (UBS) cut their EPS estimates on shares of AOL. They now have a “neutral” rating and a $25 price target on the stock.

On Feb 7th Benchmark Capital lowering its price target on shares of AOL (AOL) on the news they had acquired The Huffington Post. The firm has a price target of $24.

AOL PIPE DREAM
The Masters believe any price target over $24 is reaching for the sky. We feel the best AOL shares could pull off in the next 12 months is $21 a share from today's price, implying a 4% gain.

MASTERY Bottom Line (Saxon and Black Belt Jones Style) MASTERY Bottom line: AOL had its chance to become Google (GOOG), but that died out when they finally stopped sending American's their tin CDs (sorry dial-up).

Do you really think that AOL has the right stuff to turn itself around and be a glory web 2.0 comeback story? More importantly, are you willing to put your cash down and bet that its shares can break past $25 in the next year?

Let's say AOL does everything right, they hit it out of the park and do get the $25 price set by UBS. That's still $2 short of their IPO price from last year. Two Dollars. All this analyst can say is, cue Johnny...