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Bob Peck: 6 Things To Watch After Yahoo's Earnings

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Yahoo! Inc. (NASDAQ: YHOO) on Tuesday reported its first quarter results.

In a report published Wednesday, SunTrust Robinson Humphrey analyst Robert (Bob) Peck noted that Yahoo's Core "slows" in its turnaround, but based on a some-of-parts valuation, investors can still get the Yahoo Core for "free."

Peck's up-to-date model places a $13 per share valuation on Yahoo Core while Yahoo's stake in Alibaba Group Holding Ltd (NYSE: BABA) is valued at $39 per share (based on an approximate 20 percent premium to Alibaba's closing price on Tuesday). Finally, the analyst placed Yahoo's equity interest in Yahoo! Japan at $7 per share.

Peck also detailed six key points investors should focus on moving forward:

  • Search TAC is rising (Mozilla and Mobile), while the new Microsoft Corporation (NASDAQ: MSFT) agreement implies Yahoo is building more search capabilities.

Related Link: 5 Images That Tell The Story Of Yahoo's Earnings

  • Yahoo's headcount fell 8 percent but its operating costs rose 4 percent.
  • NET not GAAP revenues should be a focus point. Core revenues ex TAC fell 5 percent year over year with Search down 3 percent and Display down 7 percent.
  • MaVeNs (mobile, video, native and social) grew 58 percent year over year, marking a downturn from the 100 percent growth in the previous quarter.
  • Yahoo's guidance was approximately 1 percent below expectations, implying net revenue will be flat year over year.
  • Yahoo will focus on "rationalizing" non-core assets, such as Japan, "to be more efficient and shareholder friendly."

Shares remain Buy rated with an unchanged $59 price target.

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Posted-In: Alibaba Bob Peck mobile Mozilla Robert PeckAnalyst Color Analyst Ratings Tech

 

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