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Yandex Ad Focus Beats as Premium Grows: Russia Overnight

Stock investors expecting Yandex NV (YNDX)’s focus on advertising to drive sales growth next year are paying the highest premium in six weeks for Russia’s most-used search engine over Internet company Group Ltd.

Yandex, whose search site outrates Google Inc.’s in Russia, jumped 4.2 percent in New York last week and traded for 27.6 times estimated earnings on Nov. 20, 8.2 percent above the valuation for, a London-listed Russian language company that owns social network VKontakte and sells online games. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies in the U.S. gained 2.9 percent last week, and futures on the RTS Index rose 0.6 percent to 144,060 on Nov. 23.

The Hague, Netherlands-based Yandex traded at a discount (MAIL) for most of 2012 until the third quarter, when the company saw a 34 percent jump in net income and raised its annual sales forecast, according to results issued Oct. 30. Yandex, which got 98 percent of revenue from advertising last year, has climbed 18 percent in the second half, while Moscow- based, whose co-founder Gregory Finger sold his stake in September, has lost 9.1 percent.

“Over the long term I would prefer Yandex on the back of stronger market fundamentals for next year and a simpler business case,” Alexander Vengranovich, an analyst at Otkritie Financial Corp. who has buy ratings on both stocks, said by phone from Moscow Nov. 21. “Yandex is purely related to the advertising market, while Mail’s gaming business and social networks is a more difficult business case.”