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Citi Notes Buying Opportunity on Yahoo

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In a report published Thursday, Citi Research analyst Mark May reiterated a Buy rating on Yahoo! (NASDAQ: YHOO) noting the Buying opportunity on current share valuation.

May noted that the 5% pullback in shares following Yahoo's fourth quarter earnings creates a buying opportunity as the current valuation implies “worse-case scenario” assumptions. The analyst commented that the current valuation implies “1) no growth for core Yahoo! and a 5.5x terminal EBITDA multiple; 2) meaningful deceleration in revenue growth and flat margins for Alibaba Group (AG) and a P/E multiple that is only in-line with comps (24x); 3) fully-taxed on AG and YJ proceeds; and 4) no accretion from future share repurchases.”

Citi reported that downside for Yahoo! Is limited and sees a potential upside to the mid-$40s. This upside can be driven by improved confidence and transparency in growth, profitability and valuation. In addition, a Yahoo turnaround could materialize in 2H14 and the company may obtain accretion from expected significant repurchases.

Yahoo Closed at $36.24 on Thursday. Shares have traded as high as $37.06 on Friday, up 2.26%.

Latest Ratings for YHOO

DateFirmActionFromTo
Mar 2015Morgan StanleyInitiates Coverage onOverweight
Mar 2015AxiomInitiates Coverage onBuy
Feb 2015NomuraMaintainsBuy

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Posted-In: Citi Research Mark MayAnalyst Color Reiteration Analyst Ratings

 

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