Marissa Mayer Steals the Show at Yahoo! (YHOO) Q3 Call; Wall Street Likes It But Wants More
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Price: $26.54 -1.7%
Rating Summary:
14 Buy, 21 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
Rating Summary:
14 Buy, 21 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
Trade YHOO Now!
Shares of Yahoo! Inc. (NASDAQ: YHOO) are jumping 5 percent higher Tuesday following a positive third quarter earnings surprise and upbeat comments on the conference call from new CEO Marissa Mayer. After digesting the results and participating on the call, Wall Street analysts have weighed in. Below are their views:
Goldman Sachs Heath Terry - "Yahoo! reported better-than-expected 3Q results with revenue ex-TAC of $1,089mn (1.6% yoy) versus our estimate of $1,059mn and non-GAAP EPS of $0.35, including a $0.11 tax benefit, versus our estimate of $0.24. With over $14/share in cash & assets, an operating business generating over $800mn annually in FCF, the beginnings of a focused corporate strategy, and at least $3bn in open market stock repurchases as a catalyst, we believe YHOO represents a compelling risk/reward for investors." Maintain Buy, $22 price target.
Jefferies Brian Pitz - "While we liked what we heard on the earnings call, we still reiterate our Hold rating. Yahoo! is of course cheap on an SOP basis, but this factors in neither any required reinvestment to grow the business, nor the timing from the sale of the remaining Asian assets." Maintain Hold, $18 target
Nomura Brian Nowak - "YHOO reported 3Q:12 revenue of $1.1bn, 1% below us but 1% above the Street estimate. Adjusted EBIT was in line with our estimate. Even more than the results, attention was on new CEO Marissa Mayer's first commentary to the investment community as she outlined YHOO's areas of strategic focus. We are encouraged by the strategic vision and tangible examples of action to fix YHOO. In addition, near-term top-line trends remain troubling as YHOO’s core display business was again weak, growing ~1%, vs. our +6% estimate and the Street at +8%. On the plus side, YHOO’s new management team reaffirmed its commitment to returning the Alibaba cash to shareholders through open market share repurchases. Our TP rises from $17 to $18 due to YHOO's higher cash balance following the Alibaba deal, but we maintain our Neutral rating. FY12E EPS from $0.97 to $1.15; FY13E EPS from $1.07 to $1.13." Maintain Neutral, target up from $17 to $18.
Pivotal Research Brian Weiser - The call represented a satisfactory introduction of the new CEO and CFO to much of the investment community, featuring incremental color on the company's priorities. Results from the most recent quarter indicate progress around managing revenues and expenses better than we expected." Maintain Buy, $21 price target.
Wells Fargo Peter Stabler - Yahoo! reported roughly in-line but noisy results, showing some top-line progress in the U.S. while European revenue suffered. GAAP revenue was in line with our estimates, but lighter-than-anticipated TAC resulted in significant net revenue beat. Higher expenses partially offset, but $0.35 non-GAAP EPS easily beat our $0.29 estimate. Encouraging progress on display in Americas (up 6%) was offset by EMEA, posting 0% globally. Search excluding TAC was also solid, growing 7% sequentially and 11% yr/yr, though share losses continue and MSFT guarantee still contributing. Flowing through results and deal related adjustments, our 2012 and 2013 non-GAAP EPS climbs to $1.13 and $1.17 from $1.09 and $1.17, respectively. Based on improving Americas display dynamics and our view that Yahoo share multiple will benefit from clarity offered regarding investment strategy, we lift our valuation range to $17-20 from $15-17, a still significant discount to our sum-of-the-parts derived fair value of $20-22." Maintains Market Perform, raises valuation range to $17-20 from $15-17.
Cantor Fitzgerald Youssef Squali "We walk away pretty impressed with CEO Mayer's first analyst/investor call. While too broad and short on details, her strategy to re-energize Yahoo! to "above-industry growth rates", encompassing investments in Mobile, in programmatic ad selling and in Search, seems optimistic but sensible to us, nonetheless. That said, we won't start seeing the fruits of her labor, even if successful, until several quarters out at the earliest. The stock remains inexpensive with limited downside (in part due to the buyback) but lacks short-term catalysts to drive it meaningfully higher." Maintain Hold, $17 price target.
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Goldman Sachs Heath Terry - "Yahoo! reported better-than-expected 3Q results with revenue ex-TAC of $1,089mn (1.6% yoy) versus our estimate of $1,059mn and non-GAAP EPS of $0.35, including a $0.11 tax benefit, versus our estimate of $0.24. With over $14/share in cash & assets, an operating business generating over $800mn annually in FCF, the beginnings of a focused corporate strategy, and at least $3bn in open market stock repurchases as a catalyst, we believe YHOO represents a compelling risk/reward for investors." Maintain Buy, $22 price target.
Jefferies Brian Pitz - "While we liked what we heard on the earnings call, we still reiterate our Hold rating. Yahoo! is of course cheap on an SOP basis, but this factors in neither any required reinvestment to grow the business, nor the timing from the sale of the remaining Asian assets." Maintain Hold, $18 target
Nomura Brian Nowak - "YHOO reported 3Q:12 revenue of $1.1bn, 1% below us but 1% above the Street estimate. Adjusted EBIT was in line with our estimate. Even more than the results, attention was on new CEO Marissa Mayer's first commentary to the investment community as she outlined YHOO's areas of strategic focus. We are encouraged by the strategic vision and tangible examples of action to fix YHOO. In addition, near-term top-line trends remain troubling as YHOO’s core display business was again weak, growing ~1%, vs. our +6% estimate and the Street at +8%. On the plus side, YHOO’s new management team reaffirmed its commitment to returning the Alibaba cash to shareholders through open market share repurchases. Our TP rises from $17 to $18 due to YHOO's higher cash balance following the Alibaba deal, but we maintain our Neutral rating. FY12E EPS from $0.97 to $1.15; FY13E EPS from $1.07 to $1.13." Maintain Neutral, target up from $17 to $18.
Pivotal Research Brian Weiser - The call represented a satisfactory introduction of the new CEO and CFO to much of the investment community, featuring incremental color on the company's priorities. Results from the most recent quarter indicate progress around managing revenues and expenses better than we expected." Maintain Buy, $21 price target.
Wells Fargo Peter Stabler - Yahoo! reported roughly in-line but noisy results, showing some top-line progress in the U.S. while European revenue suffered. GAAP revenue was in line with our estimates, but lighter-than-anticipated TAC resulted in significant net revenue beat. Higher expenses partially offset, but $0.35 non-GAAP EPS easily beat our $0.29 estimate. Encouraging progress on display in Americas (up 6%) was offset by EMEA, posting 0% globally. Search excluding TAC was also solid, growing 7% sequentially and 11% yr/yr, though share losses continue and MSFT guarantee still contributing. Flowing through results and deal related adjustments, our 2012 and 2013 non-GAAP EPS climbs to $1.13 and $1.17 from $1.09 and $1.17, respectively. Based on improving Americas display dynamics and our view that Yahoo share multiple will benefit from clarity offered regarding investment strategy, we lift our valuation range to $17-20 from $15-17, a still significant discount to our sum-of-the-parts derived fair value of $20-22." Maintains Market Perform, raises valuation range to $17-20 from $15-17.
Cantor Fitzgerald Youssef Squali "We walk away pretty impressed with CEO Mayer's first analyst/investor call. While too broad and short on details, her strategy to re-energize Yahoo! to "above-industry growth rates", encompassing investments in Mobile, in programmatic ad selling and in Search, seems optimistic but sensible to us, nonetheless. That said, we won't start seeing the fruits of her labor, even if successful, until several quarters out at the earliest. The stock remains inexpensive with limited downside (in part due to the buyback) but lacks short-term catalysts to drive it meaningfully higher." Maintain Hold, $17 price target.
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Cantor Fitzgerald, Jefferies & Co, Nomura, Earnings, Wells Fargo
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