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Cantor Fitzgerald Upgrades Yahoo! (YHOO) to Buy on Significantly Higher Alibaba Valuation

March 5, 2013 7:41 AM EST Send to a Friend
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Price: $36.12 -0.14%

Rating Summary:
    19 Buy, 20 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 17 | Down: 38 | New: 6
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The tide has indeed changed for Yahoo! (NASDAQ: YHOO)...

Today, Cantor Fitzgerald was the fourth firm since the start of February to upgrade the stock. The firm raised its rating from Hold to Buy and raised its price target from $21 to $26.

"While we're not holding our breath for a material improvement in core Yahoo! any time soon, we believe that a stabilization in the company's underlying operations, material re-valuation of Yahoo!'s Asian assets and a $1.5B active buyback are likely to continue to drive the stock higher," the analyst said.

The firm said Yahoo! remaining stake in Alibaba could be worth $15.8 billion. This versus the $8.1 billion Yahoo! valued the stake at on its Q4 earnings call. "Recently-disclosed Alibaba financial results in Yahoo!'s 10K (albeit incomplete) showing 74% and 111% growth in FY:12 revenue and operating income, respectively, support a materially higher valuation," the firm said. They see a new valuation at a range of $53-$79B; or ~$66B at the midpoint, implying $15.8B for Yahoo!'s 24% stake, or ~$8.40/share adjusted for taxes, vs. $5.10/share previously.

On an Alibaba Group IPO, the firm said while "as elusive as spotting the unicorn" they believe that this event is getting closer, and could happen as early as 2014.

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 $22.70 yesterday.




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