Analyst: Yahoo's Acquisition Of BrightRoll A 'Positive, But Still More To Do'

announced on Tuesday it will acquire BrightRoll, a video platform company for $640 million in cash. In a note to clients on Wednesday, Brian Wieser of Pivotal Research Group explains that the combination of the two companies is a natural fit. However, there exists many challenges including integration and a need to balance BrightRoll's focus with the scale and broader relationships that Yahoo already holds. Additionally, publishers who have partnered with BrightRoll in the past due to its independence may now hold concerns around impartiality. Yahoo expects the acquisition to enhance its EBITDA and estimates BrightRoll is on pace to generate more than $100 million in net revenue this year. According to Wieser, BrightRoll's offerings have “traction” across the industry and BrightRoll's platform could benefit from Yahoo's first party data. While Wieser notes the deal is a “positive” for Yahoo, a bigger opportunity will depend upon further investments in premium video content. Shares of Yahoo are Hold rated with a price target raised to $47 from a previous $42, mostly due to the recent price-run in

The analyst calculates Yahoo's stake in Alibaba alone is now worth $28 per share.