Needham & Company Reiterated Buy and $55 Price Target on Yahoo! (YHOO) Following 2Q15

Needham & Company reiterated a Buy rating and $55.00 price target on Yahoo! (NASDAQ: YHOO) following 2Q15. YHOO reported 2Q15 net revenue (ex-TAC) of $1.043B and Non-GAAP EPS of $0.16. Analyst Laura Martin said that YHOO reiterated its commitments to spin off Alibaba in 4Q15 and maximize Yahoo! Japan’s value.

Martin commented, "YHOO reported improving fundamentals, with GAAP Revenue growth of 15% y/y, revenue ex-TAC flat y/y and Adjusted EBITDA down 23% y/y (better than 1Q15’s 25% decline, and down only 9% excluding 1x items). YHOO reiterated its commitments to spin off Alibaba in 4Q15 and maximize Yahoo! Japan’s value. We calculate that YHOO’s ownership of Alibaba is currently worth about $28/YHOO share if zero taxes are paid and $18/YHOO share if 35% taxes are paid, suggesting that investors are paying 8x 2016E EV/EBITDA worst case. Weighted for a 50% probability of paying 35% taxes, current purchasers of YHOO are paying about 4x 2016E EBITDA, too cheap to ignore in our view."

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 $39.73 yesterday.

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