Accumulate Yahoo! (YHOO) on IRS Headline Weakness, Nomura Says

Nomura Securities analyst Anthony DiClemente maintained a Buy rating on Yahoo! (NASDAQ: YHOO) but trimmed his price target to $52.00 (from $54.00) on news the IRS may revisit regulations around tax-free spinoffs, which could jeopardize the tax-free nature of the planned spinoff of Yahoo’s stake in Alibaba.

The analyst views this as a opportunity to accumulate, given that: 1) the comments did not constitute an official statement, nor were they in reference to Yahoo specifically; 2) even if the current plan for a tax-free spinoff of BABA were deemed taxable, Yahoo could effectuate a very similar outcome by spinning out its core business, leaving behind the so-called active trade or business with the untaxed Asian assets; and 3) even assuming a 40% tax rate on both the BABA and Yahoo Japan stakes, Yahoo shares are trading below net asset value of $42/share, meaning there is material downside protection.

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 $40.98 yesterday.

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