Bob Peck Highlights Three Investor Concerns On Yahoo!: 'Core, Taxes, Management'

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  • Shares of Yahoo! Inc. 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 however noted three ongoing concerns: core turnaround progress, tax issues with an Alibaba Group Holding Ltd 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.
Yahoo-Core Turnaround
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 nine percent and 45 percent respectively, with the trend expected to worsen.
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.
Management Team
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."
Maintaining At Buy
Despite the three concerns, Peck reiterated a Buy rating on shares of Yahoo with a price target maintained at $40.
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Posted In: Analyst ColorAnalyst RatingsAlibaba SpinBob PeckMarissa MayerSunTrust Robinson HumphreyYahoo
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