StreetInsider.com Rating Du Jour 11/26: Goldman Sachs Takes on Yahoo! (YHOO)
Get Alerts YHOO Hot Sheet
Price: $52.58 --0%
Rating Summary:
18 Buy, 21 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 10 | New: 13
Rating Summary:
18 Buy, 21 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 10 | New: 13
Join SI Premium – FREE
StreetInsider.com's Rating Du Jour for November 26, 2012 is Goldman Sachs' call on Yahoo! (Nasdaq: YHOO).
The firm added Yahoo! to its venerable "Conviction Buy List" and raised its price target to $24, suggesting 29 percent upside from current levels.
The gist of the call centers around Yahoo!'s capital allocation moves (i.e. share repurchases), which the firm says provides a catalyst for the stock. Based on its most recent filings, Yahoo has repurchased 54.4 million shares year-to-date for $858 million. Of that $212 million came in the fourth quarter through November. $2.792 billion, 13% of its current market cap, or 76.5% of the capital committed to the buyback from the first tranche of the Alibaba monetization remains, Goldman notes.
On Yahoo!'s core business, Goldman is raising estimates to reflect a less pessimistic view the search business, given signs of RPS improvement continue, and their forecast for upcoming cost reductions. Goldman's 2013 revenue and adjusted EBITDA estimates go up by 3% and 12%, while 2014 estimates go up 7% and 28%, respectively.
Goldman sees an even higher price tag for Yahoo! of $32 per share in a "full monetization scenario." This assumes a value for the Alibaba group of $38.5 billion, which is 8x estimated 2012 sales for the group, in-line with other Chinese internet names such as Baidu and Tencent. They value Yahoo Japan's stake at $332/share. Assuming Yahoo is able to sell the assets at these values and use the cash to buyback shares, they get to a value of $32/share including the core business.
Get StreetInsider.com's Rating Du Jour delivered to your e-mail each trading day for Free. Go to: http://www.streetinsider.com/signup_email.php?single=rating
The firm added Yahoo! to its venerable "Conviction Buy List" and raised its price target to $24, suggesting 29 percent upside from current levels.
The gist of the call centers around Yahoo!'s capital allocation moves (i.e. share repurchases), which the firm says provides a catalyst for the stock. Based on its most recent filings, Yahoo has repurchased 54.4 million shares year-to-date for $858 million. Of that $212 million came in the fourth quarter through November. $2.792 billion, 13% of its current market cap, or 76.5% of the capital committed to the buyback from the first tranche of the Alibaba monetization remains, Goldman notes.
On Yahoo!'s core business, Goldman is raising estimates to reflect a less pessimistic view the search business, given signs of RPS improvement continue, and their forecast for upcoming cost reductions. Goldman's 2013 revenue and adjusted EBITDA estimates go up by 3% and 12%, while 2014 estimates go up 7% and 28%, respectively.
Goldman sees an even higher price tag for Yahoo! of $32 per share in a "full monetization scenario." This assumes a value for the Alibaba group of $38.5 billion, which is 8x estimated 2012 sales for the group, in-line with other Chinese internet names such as Baidu and Tencent. They value Yahoo Japan's stake at $332/share. Assuming Yahoo is able to sell the assets at these values and use the cash to buyback shares, they get to a value of $32/share including the core business.
Get StreetInsider.com's Rating Du Jour delivered to your e-mail each trading day for Free. Go to: http://www.streetinsider.com/signup_email.php?single=rating
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Roth/MKM Upgrades Albertsons Companies Inc. (ACI) to Buy, 'Fundamental Floor and Improved Deal Likelihood'
- Jefferies Upgrades Medpace (MEDP) to Buy, 'Big Margin Improvements'
- Piper Sandler Upgrades BlackLine (BL) to Neutral
Create E-mail Alert Related Categories
Analyst Comments, Analyst PT Change, Insiders' Blog, Special Reports, UpgradesRelated Entities
Goldman Sachs Conviction Buy List, Goldman SachsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!