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Wedbush Raises Price Target on Yahoo (YHOO) But Still Remains Skeptic

April 20, 2011 10:39 AM EDT Send to a Friend
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Price: $38.51 +0.52%

Rating Summary:
    19 Buy, 20 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 3 | Down: 4 | New: 7
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Wedbush is reiterating its Underperform rating on shares of Yahoo! (NASDAQ: YHOO) as it still remains skeptic and concerned.

The firm reports that there is three key things:
  • Revenue per Search (RPS) continues to languish as Microsoft’s technical issues limit the ability of new customers to effectively target audiences with advertising campaigns.
  • Google (Nasdaq: GOOG) in Search and Facebook in Display continue to take market share.
  • Significant risks exist to realizing the full value of Yahoo!’s Asian investments if divested.
The company's search growth Y/Y was which is an improvement from its 6% loss in Q4:10, but still doesn't compare to Google's 32% growth. Wedbush states that excluding a one-time accrual adjustment in 1Q10, Display Advertising
revenue increased 17%.

Due to current trends and Q1 results, Wedbush is raising its FY11 and FY12 EPS estimates from $0.76 and $0.89 to $0.82 and $0.95. It is also raising its revenue estimates to $4,535 million and $4,803 million, and its price target by $0.50 to $16 to go inline with the rest of its changes.

The firm comments that, "We believe Display revenue growth was driven primarily by impression volume growth on its non-premium inventory (class II) as its premium inventory impressions declined. We believe overall click yields were flat YoY. We are encouraged by Yahoo!’s media focus and its reported YoY increases of 13%, 8%, and 17% in visitors to its Branded sites, page views, and minutes per visit."

For more ratings news on Yahoo! click here and for the rating history of Yahoo! click here.

Shares of Yahoo! closed at $16.12 yesterday.

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