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UPDATE: Oppenheimer Upgrades Yahoo! (YHOO) to Outperform, Alibaba Worth More Than Double Previous Estimate

March 21, 2013 7:35 AM EDT Send to a Friend

Oppenheimer Upgrades Yahoo! - "Alibaba is worth $10.18 per share vs. $4.70 previously" - Jason Helfstein

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(Updated - March 21, 2013 10:48 AM EDT)

Oppenheimer upgraded Yahoo! (NASDAQ: YHOO) from Perform to Outperform and raised its price target to $27 (from $22). Analyst Jason Helfstein cited three reason for the upgrade, including increased value of Yahoo Japan, the potential for an Alibaba IPO within 12 months, and EBITDA estimates that are above the Street.

"Now assuming that Alibaba is worth $10.18 per share vs. $4.70 previously. Our valuation is based on: 1) a $77 billion valuation for Alibaba Group or 20x 2014E EBIT; 2) YHOO's 24% stake; 3) $816M of preferreds; 4) a 38% tax rate; and 5) a 14% time value discount rate," said Helfstein in the upgrade report.

"Our $77 billion valuation appears reasonable based on: 1) Alibaba's 80%+ market share of China eCommerce; 2) 43% annual revenue growth estimated '12-'15, with significant margin expansion, resulting in EBIT CAGR of 51%; and 3) 20x P/E or 0.4x PEG, below other high-growth Chinese names," added the analyst.

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 $22.10 yesterday.




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