Yahoo! Rally Taking A Breather, Shares Down 2% From Recent Highs
By: Joel Elconin
With social media stocks (Facebook, LinkedIn, Twitter), internet behemoth (Google), tech giant (Apple) and high fliers (Tesla, Netflix, 3-D stocks) grabbing headlines as of late, Yahoo (NASDAQ: YHOO) shares have flown under the radar.
Shares quietly doubled in price during 2013, moving from $19.63 to $40.44 -- levels not seen since January of 2006. The issue, however, is still quite some distance from its 2000 internet tech-bubble high of $125.03.
Most, if not all, of the credit must go to Marissa Mayer, the former long-time and high-ranking officer at Google. Since taking the helm at Yahoo in July of 2012, shares have gained 150 percent in a slow and steady fashion.
Mayer instituted radical personnel policy changes, such as requiring all remote workers to convert to in-office roles and lengthening the company's maternity-leave policy while providing a cash bonus to new parents. It is hard to argue the change in culture has not added to the bottom line for the company.
While making policy changes, Mayer also engineered a series of acquisitions, including Tumblr in May of of 2013. These strategic moves enabled the company to continue a rise in profits despite a decline in revenue.
On Friday, Stifel analyst Jordan Rohan reiterated his Buy rating on the issue and raised his price target a robust nine points from $40 to $49. He cited the delay in the Alibaba IPO (from Q2 of 2014 until 2015) as a catalyst for the issue. His reasoning being the Alibaba valuation will continue to grind higher during this period, with the potential tax efficiency of the sale adding $10 to the share price.
From a technical perspective, Yahoo! shares are retreating after reaching $41.05 on December 26; establishing a series of lower highs in the last five trading sessions (including Friday)' and putting in a place of major resistance at $40.50 (last five highs from $40.36-$40.75) ahead of the fresh eight-year high.
On the downside, Yahoo! has found major support at the $38.50 level over the past month. Therefore, long-term shareholders banking on the Stifel analyst target at $49 may want to focus on a breach of $38.50 as a signal to a more significant correction in the issue.
Latest Ratings for YHOO
|Nov 2015||Boenning & Scattergood||Initiates Coverage on||Outperform|
|Oct 2015||Morgan Stanley||Maintains||Overweight|
|Oct 2015||Credit Suisse||Maintains||Neutral|
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Tags: Marissa Mayer