UPDATE 1-RESEARCH ALERT-Needham raises Yahoo to buy

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Nov 20 (Reuters) - Needham & Co upgraded Yahoo Inc (YHOO.O) to "buy" from "hold," saying the stock has neared a trough and further downside is limited even at a worst-case scenario.

"A change in leadership, new product launches and the potential for a renewed Microsoft Corp (MSFT.O) deal could all prove positive catalysts for Yahoo and its shares over the next 3 to 9 months," analyst Mark May said in a note to clients. Earlier this week, Yahoo, which in May rejected a $47.5 billion bid from Microsoft as too low, said its Chief Executive Jerry Yang will step down as soon as the board finds a replacement. Shares of Yahoo were trading at $9.25 before the bell, up from its Wednesday's close of $9.14 on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Amitha Rajan)