Q2 Preview: Mayer's Appointment Removes One Overhang for Yahoo! (YHOO)... Now What?

July 17, 2012 3:07 PM EDT
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Price: $41.99 --0%

Rating Summary:
    20 Buy, 26 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 16 | New: 54
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Shares of Yahoo! (Nasdaq: YHOO) are being sold Tuesday amid news former Google exec Marissa Mayer has been named CEO and ahead of the company's second-quarter earnings report. Yahoo! will issue the quarterly figures this afternoon following the closing bell.

After gapping about 1.5 percent higher at this morning's open, Yahoo! investors took the opportunity to sell. By 11am ET, shares were down 1.4 percent. The stock bounced at noon upon breaching the 50-day simple moving average, and is now down 0.3 percent to $15.60.

The Street's consensus for earnings sits at 23 cents per share on sales of $1.10 billion. Yahoo! reported EPS of 23 cents last quarter and earnings of 18 cents per share during the second quarter of 2011.

According to our Earnings History page, Yahoo! has beat Wall Street's estimates by nearly 20 percent over the last seven quarters.

Analysts seem to be sticking to the sidelines ahead of the company's results: data from our Ratings page shows eight sell-side firms with a Buy rating on the stock 16 with a Hold, and four with a Sell.

Analyst Commentary:
  • JPMorgan - Looking for inline quarterly results "as Display revenue returns to growth on easing comps and Search should benefit from increased traction for the Yahoo!/Bing alliance."

    The firm recently revised second-quarter figures in order to account for restructuring costs. JPMorgan now expects GAAP earnings of 16 cents per share on EBITDA of $377 million.

    JPMorgan will be looking for insight into: "early signs of operational improvement, core strategy update, update on Alibaba deal, and the latest thoughts on Right Media."

    Maintains Neutral rating and $17 price target.

  • BGC Partners - Expecting better-than-consensus results "driven by tight cost controls." Modeling for adj-EPS of 25 cents on sales of $1.109 billion.

    Despite display competition from both Google and Facebook, the firm said it is "positive on the efforts of the company to increase video content via partnerships that can command premium advertising rates." On search, BGC believes the "transition is likely to remain a painful process in 2012."

    Maintains Buy and $20 price target.
Yahoo! generally reports right at 4:05pm ET. Tune into our Earnings category to get an analysis of the results just seconds after the official release from the company.

Yahoo! will hold a conference call at 5pm ET. Go to http://investor.yahoo.com to hear the webcast. Yahoo! has confirmed Marissa Mayer will not be on the call.

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