Axiom's Anthony Offers Insight Ahead Of Yahoo's Q2 Results

In a report published Monday, Axiom analyst Victor Anthony stated that he is "not giving up" on Yahoo! Inc. YHOO ahead of its second quarter results (scheduled to be released after Tuesday's market close) while also acknowledging inherent risks. Anthony is projecting Yahoo will report revenues ex-TAC of $1.03 billion, adjusted EBITDA of $250 million, and non-GAAP earnings per share of $0.17. The analyst noted that his estimates are in-line with buyside expectations. "2Q15 results should show continued improvements in investment areas of mobile, video, native and social, and sequential expense leverage, but are unlikely to show overall core improvement as the PC business remains under pressure due to pressures on premium display," Anthony noted. According to Anthony, investors will be "looking for confidence" from Yahoo's management during the post earnings conference call in its ability to secure a favorable IRS ruling for its spin of Alibaba Group Holding Ltd BABA, as well as the timing of such a ruling. The analyst added that the market is currently pricing in a "meaningful" risk that the company will not receive a favorable ruling and that commentary around the issue "would provide some level of comfort." What Else To Look Out For? Anthony also listed several other key items investors should look out for in Yahoo's print and conference call: 1. Whether (if not then when) investments in mobile, video, native and social can offset growth declines in PC. 2) Whether Yahoo can switch over to Google Search and when. 3) Whether Tumblr is on track to generate more than $100 million in revenue this year. 4) Signs Yahoo is still demonstrating display revenue growth. 5) Did Yahoo meet its guidance for an eight to 10 percent quarter over quarter decline in cash expenses? 6) Management's commentary surrounding the analyst's view that Yahoo Japan is "no longer a catalyst for the stock." 7) Share buyback expectations. Shares remain Buy rated with a price target lowered to $50 from a previous $51.