Bob Peck Highlights Three Investor Concerns On Yahoo: 'Core, Taxes, Management'
- Shares of Yahoo! Inc. (NASDAQ: YHOO) have lost more than 30 percent over the past year.
- Bob Peck of SunTrust Robinson Humphrey maintained a Buy rating and $40 price target on Yahoo's stock.
- Peck noted three ongoing concerns: core turnaround progress, tax issues with an Alibaba Group Holding Ltd (NYSE: BABA) spin, and the stability of management.
Bob Peck of SunTrust Robinson Humphrey maintained a bullish tone on shares of Yahoo despite three growing concerns that investors should be aware of.
Peck stated that after nearly 3.5 years and $7 billion in spending, Yahoo's management led by Marissa Mayer has been "unable to show meaningful progress" in Yahoo's core turnaround. In addition, since 2012, Yahoo's revenue and EBITDA have fallen 9 percent and 45 percent respectively, with the trend expected to worsen.
Related Link: Yahoo's Core Is A Work In Progress
Alibaba Tax-Free Spin
According to Peck, Yahoo investors have become "more concerned" surrounding the potential for a tax-free spin of Alibaba. The analyst added that "there is still the risk" that the IRS will deem the transaction taxable, which could "usurp the majority of the value" of Yahoo's stake in Alibaba.
Finally, Peck pointed out that Yahoo's executive turnover has "accelerated" in 2015 following the departure of Jackie Reses, Kathy Savitt, and S. Burke. In fact, throughout 2015, 13 key executives have left the company which "disrupts continuity."
Despite the three concerns, Peck reiterated a Buy rating on shares of Yahoo with a price target maintained at $40.
Latest Ratings for YHOO
|Oct 2016||MKM Partners||Maintains||Buy|
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