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(Nasda: LOCM) Local.com Q4FY11 Research Update

Q4FY11 LOCM Update $4.80 PT

The growth of Local.com’s business continues unabated. On January 12, 2012, the Company announced record fourth quarter 2011 search traffic. The Company reached total traffic of 93.7 million monthly unique visitors (MUVs) on the Local.com site and network during the fourth quarter, up from 91.9 million MUVs from the third quarter 2011 and up from 80.1 million MUVs from the year ago period. On February 7, 2012, the Company announced that its display network served a record one billion ad impressions during December 2011, up 300% over January 2011. The record impressions were served across the flagship Local.com site, the Company’s syndication network of more than 1,000 regional media sites, and the Company’s recently launched display ad network, which powers display advertising for third-party web publishers. The Company’s display ads generate CPM revenues when banner ads are served through the system.

We are maintaining a buy recommendation. We have adjusted our 12-month price target from $4.95 to $4.80 to reflect a slight reduction in our 2012 revenue estimate (still up 43% from 2011) and a slightly higher shares outstanding assumption. This target remains well below the stock’s January 2010 high of $7.25, but twice the current market price.