Jan. 12 (Bloomberg) -- Yahoo! Inc. fell 6.9 percent in Nasdaq trading after Broadpoint AmTech cut its recommendation on the stock, citing a slower online advertising market.

Analyst Rob Sanderson lowered his rating to “neutral” from “buy” and reduced his target price to $14.50 from $18. Yahoo will remain “challenged” amid the sales slowdown, he said today in a note to clients. Still, the potential for a merger or acquisition of some kind will keep the stock from going into a freefall, he said.

The company faces an uphill climb in the search-ad market against industry leader Google Inc. In November, Google had 63.5 percent of U.S. search queries, more than triple Yahoo’s 20.4 percent, according to researcher ComScore Inc.

Yahoo fell 91 cents to $12.22 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have lost 48 percent in the past year, compared with a 37 percent decline in the Standard & Poor’s 500 Information Technology Index.

Sanderson said he’s concerned that Yahoo’s low of $8.95 in November may be retested.

“We expect e-commerce sales to slow materially in the near-term and the online advertising market to take a much greater than seasonal decline” in the first quarter, he wrote.

Sanderson lowered his target price for Google by $10 to $400 as the industry’s sales slow. He maintained his “buy” rating on the stock.

Tim Boyd, another Broadpoint AmTech analyst, cut his rating on Amazon.com Inc. today to “sell” from “neutral,” citing concerns about U.S. ad spending. Amazon, the world’s largest Internet retailer, fell $3.59, or 6.5 percent, to 51.92 on the Nasdaq.

To contact the reporter responsible for this story: Brian Womack at Bwomack1@bloomberg.net

Last Updated: January 12, 2009 16:20 EST