UPDATE: Stifel Reiterates Buy Rating, Lowers PT on Yahoo! Following Below-Estimates 3Q13 Earnings

In a report published Wednesday, Stifel analyst Jordan Rohan reiterated a Buy rating on Yahoo! YHOO, but lowered the price target from $41.00 to $40.00. In the report, Stifel noted, “Yahoo results were slightly below our estimates, and at the low end of the profit range; 4Q guidance was lowered. Our estimates moderate downward and PT decreases slightly from $41 to $40 on decreased Yahoo Core EBITDA estimates. The good news: 1) Alibaba's fundamentals continue to impress: revenues +61% y/y to $1.74bn (a slight decel vs. +71% in 1Q), gross margins 74%, operating margins of 49% and net income margins of 41%. 2) Yahoo amended its agreement with the Alibaba Group to sell only 40% of its Alibaba stake concurrent with the offering, down from the prior 50%. 3) Yahoo may sell the remaining shares at its discretion, enabling the company to seek a tax efficient sale and a higher valuation. Yahoo may also choose to maintain the second part of the stake without selling it. Reiterate Buy based on potential Alibaba upside, $40 target.” Yahoo! closed on Tuesday at $33.38.