UPDATE: Goldman Sachs Color on Demand Media Upgrade

Goldman Sachs, which upgraded shares of Demand Media DMD, is providing some color on the stock. “We upgrade shares of DMD to Buy (from Neutral) as we believe the stock has negatively overreacted to the impact of Google's GOOG ‘Panda 2' algorithm changes,” Goldman Sachs writes. “Panda's likely single-digit impact to earnings has sent shares down 40% since mid-April (and 20% below its IPO price), and we believe current valuation reflects future negative changes that are unlikely to materialize. “Management has identified and is in the process of fixing Panda-related issues, and “Panda 3” does not appear to threaten the company. DMD is a unique business model and one of the fastest-growing Internet companies; we look for a 42% EPS CAGR from 2012-2015E.” Demand Media closed Monday at $46.33.