Nomura upgraded Yahoo! Inc. YHOO Wednesday from Neutral to Buy and raised its price target from $40 to $57.
Analyst Anthony DiClemente believed “Yahoo has the clear potential to unlock significant value for investors by monetizing its Alibaba and Yahoo Japan stakes in a tax-efficient manner.”
“The market is currently underappreciating the sum-of-the-parts asset value embedded within YHOO, as implied stakes in BABA and Yahoo Japan are currently worth more than YHOO’s trading price today,” according to DiClemente.
“Giving credit for Yahoo’s cash and assuming a conservative value for its core business makes Yahoo a Buy,” concluded DiClemente.
The analyst report determined the “target price by averaging our four valuation scenarios that consider marked-to-market vs Nomura valuation for Alibaba, marked-to-market Yahoo Japan, and taxation rates.”
The firm adjusted estimates for FY 2014E EPS from $1.70 to $1.59 and FY15E EPS from $2.04 to $1.11.
Yahoo! Inc. recently traded at $45.38, down 1.06 percent.
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