Yahoo Now Worth More, Credit Suisse Says

In a report published Wednesday, Credit Suisse analysts maintain their Neutral rating on Yahoo! Inc. YHOO. The price target has been raised from $66 to $68.The company reported its 1Q revenues in line with the expectations. Yahoo! reported a lower than expected results for its Display and Other segments, which was offset by higher than anticipated revenue for the Search segment. The analysts believe that this outperformance was largely driven by the recent Mozilla search deal. "Our price target is now $68 vs prior $66 as we increase the value of the Yahoo Japan ownership stake to reflect current market pricing. Our FY15 gross revenue and Adj. EPS are now $5.14b/$0.41 vs prior $4.74b/$0.56," the analysts explained. According to Credit Suisse, "While search revenue on a GAAP basis stepped up materially following the commencement of the Mozilla search agreement, a concurrent increase in associated TAC leaves us on the sidelines as it remains to be seen if Yahoo can narrow the search query monetization gap that should drive net revenue growth LT." Credit Suisse has revised its adjusted EPS and revenue estimates for FY15 from $0.56 and $4.74 billion to $0.41 and $5.14 billion, respectively. The FY16 adjusted EPS and revenue estimates have been revised from $0.57 and $4.9 billion to $0.52 and $5.29 billion, respectively. "As we continue to wait for the spinoff of Yahoo's Asian assets, we expect investors to continue to focus on the potential liquidity impact and tax-implications of the transaction," the analysts added.