Demand Media Gets Its First Buy Rating! (And A Few Holds) (DMD)

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Investment bank Stifel Nicolaus began its coverage of Demand Media with a buy rating and a price target of $28.

That’s a nice vote of confidence from Wall Street for a company that just went public and is generating lots of controversy around its business model and accounting practices.

Meanwhile Goldman Sachs and Jefferies both have a Hold/Neutral rating. Jefferies in particular likes Demand Media but is cautious given its huge post-IPO pop.

For the bull’s case, here’s what Stifel Nicolaus thinks (rephrased and translated from banker-ese):

• Demand Media is better than anyone else at producing content people want to read, cheaply and in volume.
• Demand makes evergreen content that’s cheaper to produce and makes more money over time than other digital content providers (read: blogs).
• Sure, Demand is dependent on Google now, but

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