Cowen Positive on Yahoo! (YHOO) Ahead of Q4 Report; Alibaba Sale, Capital Allocation Key Factors

Cowen and Company is positive on Yahoo! (Nasdaq: YHOO) ahead of the company's Q4 report, which is expected out on Tuesday, January 27th.

Analyst John Blackledge is looking for Q4 revenue of $1.18 billion, ex TAC, which is at the high-end of guidance. We forecast Display revenue (ex-TAC) to decline 4% y/y, slightly better than the
7% and 6% y/y declines in 2Q14 and 3Q14, respectively. We expect Search revenue to remain flat (vs. +6% y/ y last quarter), the analyst said.

Looking at EBUTDA, we forecast $369 million, down 13% y/y, and above the midpoint of guidance of $340 to $380 million. We estimate $0.16 in GAAP EPS, and $0.21 on a non-GAAP basis.

Positives include Yahoo!'s ability to sell its Alibaba (NYSE: BABA) stake and other foreign assets in a tax-sheltered manner, capital returns to shareholders, and better-than-expected core fundamentals.

Negatives include not selling the Alibaba stake in a tax-free manner and deteriorating display business fundamentals.

Cowen has Yahoo! at Market Perform with a price target of $38.

For an analyst ratings summary and ratings history on Yahoo! click here. For more ratings news on Yahoo! click here.

Yahoo! closed at $48.95 yesterday.

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