Goldman Sachs Trashes Yahoo! (YHOO), Resumes Coverage at "Sell" Saying Shareholders Will Get Zip from Strategic Review
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Rating Summary:
14 Buy, 21 Hold, 3 Sell
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Today's Overall Ratings:
Up: 11 | Down: 17 | New: 21
Rating Summary:
14 Buy, 21 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 17 | New: 21
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Goldman Sachs resumed coverage on Yahoo! (NASDAQ: YHOO) Wednesday with a Sell rating and $14 price target, suggesting 10% downside.
The firm said the deteriorating core business outweighs the asset value. "While there is significant value on Yahoo's balance sheet, we don't expect management will be able to unlock it to shareholders' benefit before Yahoo's core business deteriorate further," the analyst said.
On the ongoing strategic review, Goldman doesn't see any positives for public shareholders to come from it. "The current board’s reported preference for a
minority deal makes it unlikely that a deal will create value for shareholders," the analyst said.
Despite the best efforts of management, Yahoo! continues to see user engagement decline, with global minutes/user down 5% year-over-year, versus a 5% rise for the Internet as a whole, the firm notes. Goldman also said the company lacks a meaningful mobile offering, has a stagnant email product and is seeing declining usage in many profitable segments, like search, mail, and entertainment.
Search remains a big risk for Yahoo!, according to Goldman. "While Microsoft was charitable enough to extend the minimum revenue per search guarantee that was due to expire in March for an additional year, we still see significant risk to Yahoo!’s search business, roughly half of EBITDA," the firm said.
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 $15.42 yesterday, with a 52 week range of $11.09-$18.84.
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The firm said the deteriorating core business outweighs the asset value. "While there is significant value on Yahoo's balance sheet, we don't expect management will be able to unlock it to shareholders' benefit before Yahoo's core business deteriorate further," the analyst said.
On the ongoing strategic review, Goldman doesn't see any positives for public shareholders to come from it. "The current board’s reported preference for a
minority deal makes it unlikely that a deal will create value for shareholders," the analyst said.
Despite the best efforts of management, Yahoo! continues to see user engagement decline, with global minutes/user down 5% year-over-year, versus a 5% rise for the Internet as a whole, the firm notes. Goldman also said the company lacks a meaningful mobile offering, has a stagnant email product and is seeing declining usage in many profitable segments, like search, mail, and entertainment.
Search remains a big risk for Yahoo!, according to Goldman. "While Microsoft was charitable enough to extend the minimum revenue per search guarantee that was due to expire in March for an additional year, we still see significant risk to Yahoo!’s search business, roughly half of EBITDA," the firm said.
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 $15.42 yesterday, with a 52 week range of $11.09-$18.84.
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