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IACI: Goldman Upgrades, Lifts Target; Will MSFT Buy

IAC/Interactive (IACI) shares are trading higher this morning after Goldman Sachs analyst Ingrid Chung upped her rating on the stock to Buy from Neutral, setting a new price target of $28, up from $20. The stock closed yesterday at $20.98.

Chung cited three reasons for the upgrade:

* She sees improving revenue and earnings momentum for its search and ServiceMacgic units, “as both are leveraged to a better economy.”
* She sees upside “from our belief that could be an acquisition target.” Chung says Microsoft (MSFT) could acquire Ask once MSFT get government approval to complete its Yahoo (YHOO) partnership.
* Limited downside for the stock give $12.25 a share in cash.

She raised her EPS estimate for Q4 to 17 cents, from 16 cents. For 2010, she goes to 75 cents, from 62 cents. And for 2011, she now sees 99 cents, up from 73 cents.
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