SunTrust's Peck Says Buy The Dip In Yahoo! Shares

In a report published Wednesday, SunTrust Robinson Humphrey analysts maintained a Buy rating on Yahoo! Inc. YHOO, with a price target of $59, saying that the company's share price currently reflects the worst-case tax scenario. Media reports quoted parts of a speech made by an IRS official, which raised concerns related to Yahoo's planned spinoff of Alibaba Group Holding Ltd BABA. In the report SunTrust noted, "Alibaba shares from Yahoo! would be tax free based on potential rules changes. It is extremely unclear what exactly the IRS may be studying, or what impact it could have to Yahoo's proposed spin. We believe that ambiguous statements from a non-senior employee at a DC event is not how the IRS would communicate breaking or "material news."" Yahoo is unlikely to go ahead and complete a transaction at a tax level of 40 percent, as this would not be a "prudent use of capital." Following yesterday's decline in Yahoo's share price, the stock now reflects a worst case tax scenario of 40 percent. The analysts believe this offers a "buying opportunity for investors."