SunTust's Bob Peck On Yahoo's $5 Billion Bids: 'This Makes More Sense!'

CNBC reported Yahoo! Inc. YHOO has received multiple bids at or above $5 billion for the core business, and SunTrust's Bob Peck said the bids "make more sense."

"Given the level of interest, we remain optimistic that the core could fetch ~$6B in the ongoing auction," Peck wrote in a note.

CNBC said Verizon Communications Inc. VZ bid more than $3.5 billion that didn't include real estate, but was amongst the low bids.

Related Link: Yahoo Spikes After Reportedly Getting Multiple $5 Billion Bids

Peck said some of the bids may or may not include all the various assets currently for sale, including IP, real estate/PP&E, Yahoo Japan perpetual royalties, Tumblr, etc. This is materially above the $2-$3 billion valuation Wall Street Journal had reported previously.

Peck, who has a Buy rating on the stock, estimates the tax cost basis for the core at about $3 billion and said each billion of bidding is only about $1 per share.

The analyst highlighted the bulk of the value creation remains in tax efficiently monetizing the $40 billion Alibaba Group Holding Ltd BABA and Yahoo Japan assets post the core sale.

According to TipRanks, Peck has a success rate of 56 percent with an average return per recommendation of +4.6 percent. The analyst is ranked 514 out of 3,990 analysts.

Separately, Wall Street Journal reported that Yahoo has begun the process to sell its about 3,000 patent portfolio and hired Black Stone IP to run the auction for its patent portfolio that could generate proceeds of about $1 billion. The patent portfolio covers key areas such as e-commerce and online advertising.

At time of writing, shares of Yahoo were up 0.77 percent to $37.26.