Market Overview

Yahoo! Rally Taking A Breather, Shares Down 2% From Recent Highs

Yahoo! Rally Taking A Breather, Shares Down 2% From Recent Highs

By: Joel Elconin

With social media stocks (Facebook, LinkedIn, Twitter), internet behemoth (Google), tech giant (Apple) and high fliers (Tesla, Netflix, 3-D stocks) grabbing headlines as of late, Yahoo (NASDAQ: YHOO) shares have flown under the radar.

Shares quietly doubled in price during 2013, moving from $19.63 to $40.44 -- levels not seen since January of 2006. The issue, however, is still quite some distance from its 2000 internet tech-bubble high of $125.03.

Most, if not all, of the credit must go to Marissa Mayer, the former long-time and high-ranking officer at Google. Since taking the helm at Yahoo in July of 2012, shares have gained 150 percent in a slow and steady fashion.

Mayer instituted radical personnel policy changes, such as requiring all remote workers to convert to in-office roles and lengthening the company's maternity-leave policy while providing a cash bonus to new parents. It is hard to argue the change in culture has not added to the bottom line for the company.

Related: Groupon Revisits Important Technical Level of $12

While making policy changes, Mayer also engineered a series of acquisitions, including Tumblr in May of of 2013. These strategic moves enabled the company to continue a rise in profits despite a decline in revenue.

On Friday, Stifel analyst Jordan Rohan reiterated his Buy rating on the issue and raised his price target a robust nine points from $40 to $49. He cited the delay in the Alibaba IPO (from Q2 of 2014 until 2015) as a catalyst for the issue. His reasoning being the Alibaba valuation will continue to grind higher during this period, with the potential tax efficiency of the sale adding $10 to the share price.

From a technical perspective, Yahoo! shares are retreating after reaching $41.05 on December 26; establishing a series of lower highs in the last five trading sessions (including Friday)' and putting in a place of major resistance at $40.50 (last five highs from $40.36-$40.75) ahead of the fresh eight-year high.

On the downside, Yahoo! has found major support at the $38.50 level over the past month. Therefore, long-term shareholders banking on the Stifel analyst target at $49 may want to focus on a breach of $38.50 as a signal to a more significant correction in the issue.

Latest Ratings for YHOO

Oct 2016JefferiesDowngradesBuyHold
Oct 2016NeedhamDowngradesBuyHold
Oct 2016MKM PartnersMaintainsBuy

View More Analyst Ratings for YHOO
View the Latest Analyst Ratings

Tags: Marissa Mayer

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