Yahoo! (YHOO) Target Lifted to $59 at Evercore ISI

Evercore ISI analyst Ken Sena boosted his price target on Yahoo! (NASDAQ: YHOO) to $59.00 (from $50.00) but maintained a Hold rating following earnings and the tax free spin-off its remaining Alibaba stake.

Sena commented, "Yahoo! announced a plan to tax-efficiently spin off BABA holdings, netting about $16 per YHOO shares in tax efficiency (assuming 40% tax rate). The result will be two independent public companies: 1.) SpinCo and 2.) Yahoo (including 35.5% interest in Yahoo Japan). 100% of the shares of SpinCo will be distributed to Yahoo shareholders pro rata and will assume no debt. However, with shares up just 7% on the announcement, it equates to just about $3bn, or 20% being acknowledged. While there are procedural approvals still to go and a fair amount of expectation for this outcome may have already been in shares, it would seem that even on very conservative assumptions around the core, there is still room for upside."

He added, "Our value for SpinCo, just counting the BABA holding, equates to $48 per share. This presumes that at the time of the spin (end of 4Q), BABA shares trade at the mid-point of where they are today and our $130 BABA target. On the Yahoo! side, we assign $11 per share, which includes $4 for Yahoo Japan! (40% Tax Effected), $3 to the core (~4x '16 EBITDA, inclusive of SBE), and $4 in net cash, for which we subtract $4bn in IPO-related taxes payable and share repurchase commitments."

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 $47.99 yesterday.

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