Analyst Catherine Watters says the company's deal extension with AOL Time Warner signals that talks remain intense, with both sides pushing hard on deal terms. However, she says she is confident a deal will be renewed given the company's mutually beneficial relationship. From AOL's perspective, Overture is an important partner as it provides AOL with a meaningful amount of revenue, particularly as AOL's online advertising business is suffering. There also no comparable pay-for-performance search service that could provide AOL with the same amount of revenue or value. Watters says she expects Overture to continue to be volatile, but says she would buy shares on weakness. She has a $48 target.