NEW YORK (CNN/Money) - Shares of Internet bellwether Yahoo! tumbled Thursday as positive first-quarter results garnered a less than enthusiastic reaction from Wall Street analysts.

Yahoo! (YHOO: down $2.86 to $15.58, Research, Estimates) shares were off about 13 percent in late morning trading after the Internet media company posted its sixth consecutive quarterly loss but topped its revenue forecast as sales rose a stronger-than-expected 7 percent.

But a host of brokerage firms expressed concerns about the stock's valuation and a challenging advertising environment.

Yahoo! raised its 2002 revenue target but gave no guidance on its earnings going forward.

Excluding one-time items, the Sunnyvale, Calif.-based company reported earnings of $10.5 million, or 2 cents a share, in line with expectations, compared with a loss of $11.5 million, or 2 cents a share, a year earlier. Including a non-cash charge of $64.1 million for goodwill accounting changes, Yahoo! reported a net loss of $53.6 million, or 9 cents a share, for the quarter.

Yahoo! sales rose nearly 7 percent to $192.7 million from $180.2 million, topping forecasts of $175 million.

Merrill Lynch, which downgraded to stock to "near-term neutral" from "buy," called Yahoo!'s first-quarter performance "solid but unspectacular," saying the upside was modest excluding the company's HotJobs acquisition.

The firm said in its research note that it does not see a significant upside to 2003 estimates it believes are necessary to sustain its current "lofty" multiple, and reiterated its cautious view of online advertising.

Yahoo! stated that advertising and marketing revenue dropped 15 percent in the quarter because of continued sluggishness in the advertising business.

Analyst Anthony Noto of Goldman Sachs put forward a similar opinion, adding that Yahoo!'s first-quarter revenue growth was encouraging but that the stock's valuation remains high "especially without organic growth." He added that valuation appears to be "momentum-driven, reflecting anticipation of continued earnings strength followed by a third-quarter return of organic growth. "

Credit Suisse First Boston analyst Heath Terry maintained a "hold" rating on the stock due to valuation concerns. On a positive note, he said the company's balance sheet remains strong as it is making progress in the diversification of its revenue bases and enjoys the margin benefits of its reduced cost structure.

Robertson Stephens analysts also joined the chorus of concern about the stock's valuation and the company's ability to achieve a turnaround plan with respect to advertising.

Morgan Stanley, however, raised its 2002 earnings estimate to 11 cents from 10 cents a share, and reiterated an "attractive" rating on the stock, saying the data did demonstrate a "solid turnaround momentum" despite a seasonally challenging quarter and difficult environment.

Echoing that sentiment was SoundView media analyst Rohan Jordan. "No matter what my competitors said today, Yahoo!'s first-quarter earnings were solid. The company didn't push or stretch to make this quarter. Revenues were flat year-over-year (excluding HotJobs), despite burning through $30 million of dot.com ad revenue. We see a strive to the upside in online advertising. The truth is that Yahoo! will gain share this year."

On a more conservative note, he added, "There isn't enough upside in the quarter for me to recommend adding to positions this very second. The stock is expensive, already baked in. We urge patience. "

Separately, the New York Times reported Thursday that Yahoo! has changed its privacy policy in a bid to boost profits.

According to the report, Yahoo! said it has made it clear that it has the right to send mail and make sales calls to tens of millions of its registered users. And it has given itself permission to send users e-mail marketing messages on behalf of its own growing family of services, even if those users had previously asked not to receive any marketing from Yahoo.