Needham & Company Cuts Price Target on Yahoo! (YHOO) Ahead of 3Q Results

Needham & Company maintained a Buy rating on Yahoo! (NASDAQ: YHOO), and cut the price target to $40.00 (from $55.00), ahead of the company's 3Q15 earnings release. 3Q15 GAAP Operating Income is expected to be a loss of $72mm and Non-GAAP Operating Income is expected to be $73mm. YHOO will release 3Q15 results after the market closes on Tuesday, October 20, 2015 and management will host a conference call at 5pm ET to discuss results.

Analyst Laura Martin commented, "We maintain our 3Q15 estimates of net revenue of $1.02B (down 7% y/y) and Non-GAAP EPS of $0.17 (down 68% y/y), but we lower estimates for 4Q15, FY15 and FY16, based on slower growth rates and lower profitability estimates. We now expect FY15 revenue of $4.2B (down 5% y/y, 4% below previous estimates), and Non-GAAP EPS of $0.69 (down 57% y/y, 4% below previous estimates). We lower FY16 estimates to revenue of $4.12B (down 1% y/y, 5% below previous estimate), and Non-GAAP EPS of $0.69 (flat y/y, 16% below previous estimates). Due to lower FY16 estimates and higher WACC tied to rising risk, we lower our 12-month Target Price to $40 (from $55). We maintain our Buy rating based on a sum-of-the parts analysis that concludes that investors are getting YHOO’s core business for “free” despite $988mm of expected EBITDA in FY16E."

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 $32.37 yesterday.

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