UPDATE: Citigroup Reiterates Buy Rating, Raises PT on Yahoo! Following Strong Alibaba Results, Encouraging Trends

In a report published Wednesday, Citigroup analyst Mark May reiterated a Buy rating on

, and raised the price target from $30.00 to $31.00. In the report, Citigroup noted, “Like many recent quarters, Yahoo!'s earnings report included puts and takes, but we believe the net of these were positive in 2Q13. The positives, in our view, were: 1) Alibaba Group's (AG) growth (in 1Q13) was significantly better than we forecast (recall that we estimate AG represents ~35% of YHOO's current value); 2) the company recommitted to its buyback program, with at least another $1.9bn to come; and, 3) user engagement, a precursor to revenue growth, stabilized and even began to grow again in 2Q13. The main negative, which resulted in a 1% reduction in CY13 rev guidance, was that display pricing continues to be pressured by industry dynamics related to growth in cheaper inventory sources and gains by ad exchanges. While we tweak our core Yahoo! forecasts down, our price target increases from $30 to $31 due to the significantly better Alibaba Group results.” Yahoo! closed on Tuesday at $26.88.