Yahoo! (YHOO) PT Raised at Evercore Partners on Higher Alibaba Valuation

Evercore Partners analyst Ken Sena bumped his price target on Yahoo! (NASDAQ: YHOO) from $39 to $42 following Q1 results, but maintained his Equal Weight rating. The price target increase comes amid an increased valuation for Alibaba after the company delivered strong results.

Sena commented, "Alibaba delivered accelerated revenue growth of 71% y/y ($3.06bn) compared to 51% in 3Q13, despite a tougher comparison. Equally impressive, Alibaba’s EBIT margin was 54% compared with our 45% estimate and vs. 44% in the prior year. Flowing this outperformance through to our Alibaba valuation supports a further increase. We are now at $165bn, up from $150bn, on $4bn in trailing EBIT, implying roughly the same EV/EBIT valuation as where FB currently trades."

On core Yahoo!, Sena notes trends continue to stabilize. "Total net revenue came in at $1.09bn, or 1% y/y, and about 2% ahead of our estimate. Specifically, core search and display came in 6% and 3% above our estimates, respectively, offset by a miss in Other revenue," he notes. "In Search, the company saw paid clicks grow 6%, the ninth quarter in a row of growth. Pricing per ad in the quarter was also healthy, rising 8%, largely driven by strength in APAC (+16%), thanks to mix shift away from lower yielding affiliate clicks."

For an analyst ratings summary and ratings history on Yahoo! click here. For more ratings news on Yahoo! click here.

Shares of Yahoo! closed at $34.21 yesterday.

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