Bob Peck: 6 Things To Watch After Yahoo's Earnings
In a report published Wednesday, SunTrust Robinson Humphrey analyst Robert (Bob) Peck noted that Yahoo's Core "slows" in its turnaround, but based on a some-of-parts valuation, investors can still get the Yahoo Core for "free."
Peck's up-to-date model places a $13 per share valuation on Yahoo Core while Yahoo's stake in Alibaba Group Holding Ltd (NYSE: BABA) is valued at $39 per share (based on an approximate 20 percent premium to Alibaba's closing price on Tuesday). Finally, the analyst placed Yahoo's equity interest in Yahoo! Japan at $7 per share.
Peck also detailed six key points investors should focus on moving forward:
- Search TAC is rising (Mozilla and Mobile), while the new Microsoft Corporation (NASDAQ: MSFT) agreement implies Yahoo is building more search capabilities.
- Yahoo's headcount fell 8 percent but its operating costs rose 4 percent.
- NET not GAAP revenues should be a focus point. Core revenues ex TAC fell 5 percent year over year with Search down 3 percent and Display down 7 percent.
- MaVeNs (mobile, video, native and social) grew 58 percent year over year, marking a downturn from the 100 percent growth in the previous quarter.
- Yahoo's guidance was approximately 1 percent below expectations, implying net revenue will be flat year over year.
- Yahoo will focus on "rationalizing" non-core assets, such as Japan, "to be more efficient and shareholder friendly."
Shares remain Buy rated with an unchanged $59 price target.
Latest Ratings for BABA
|Sep 2016||Deutsche Bank||Maintains||Buy|
|Sep 2016||Daiwa Capital||Maintains||Buy|
|Aug 2016||JP Morgan||Assumes||Overweight|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.