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UPDATE: Yahoo Upgraded Ahead of Earnings; Analyst Values Alibaba IPO Between $160-$180B

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On Tuesday, Macquarie upgraded shares of Yahoo (NASDAQ: YHOO) from Neutral to Outperform and raised the price target from $37.50 to $40.

The company is also expected to report first quarter earnings after market close on Tuesday.

Analyst Ben Schachter believes investors should buy the stock “ahead of the expected upcoming Alibaba IPO,” which the analyst valued at $160-$180 billion.

Schachter arrives at a value of $40 based on:

  • The Alibaba estimated valuation.
  • 35 percent stake in Yahoo! Japan.
  • Yahoo's Asia assets worth $28.76/share.
  • $4.2 billion in cash.
  • Applying a 5x multiple on ‘14 EBITDA estimate of $1.36 billion.

The analyst's model “does not anticipate improvement in the core business,” that already has low expectations by Street analysts.

Schachter's upgrade is “clearly a trading call not, in any way, a positive call on YHOO's core fundamentals.”

The analyst remained concerned “about near-term trends in both search and display and are rather pessimistic about YHOO's long-term competitive positioning in search, particularly mobile search.”

Latest Ratings for YHOO

DateFirmActionFromTo
Jan 2015CRT CapitalUpgradesFairly ValuedBuy
Jan 2015JP MorganMaintainsOverweight
Jan 2015JefferiesMaintainsBuy

View More Analyst Ratings for YHOO
View the Latest Analyst Ratings

Posted-In: Ben Schachter MacquarieAnalyst Color Analyst Ratings Tech

 

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