Citigroup Sees Yahoo Returning To Growth

In a report published Monday, Citigroup analyst Mark May reiterated a Buy rating and $63.00 price target on Yahoo! Inc. YHOO. In the report, Citigroup noted, “As Yahoo! is expected to soon shed more light on the spin-off of its stake in BABA and as that spin-off likely occurs in 2H15, the focus this year will begin to return to core Yahoo! Despite negative press coverage and consensus forecasts that call for only 2% net revenue growth (ex-FX) this year, we believe core Yahoo! is showing green shoots as fast-growing mobile revenue becomes increasingly material to overall results. As such, we see a path to 6-9%+ net ad revenue growth ex-FX in CY15 and the potential for upside to consensus ests (note that we focus on net ad revenue growth, as the end of the TIPLA amortization beginning in 4Q15 will create a quarterly headwind of $70mn to Other revenue). Given this, and our view that there is still upside as investors price in the tax-efficient sale of the BABA stake, we maintain our Buy rating.” Yahoo closed on Friday at $48.95.