Macquarie Reiterates Outperform on Yahoo! (YHOO) Following 2Q Results

Macquarie reiterated an Outperform rating and $36.00 price target on Yahoo! (NASDAQ: YHOO) following the company's 2Q earnings report. Results were in-line with expectations. However, costs came in better that expected as the company now has 8,800 employees, down from almost 11,000 a year ago.

Analyst Ben Schachter commented, "The quarter and the earnings call were about in line with our expectations: no update on the potential strategic alternatives process and no improvement to the trajectory of the core business revenue drivers (both net search and display decelerated further). Costs did come in better than expected as YHOO now has 8,800 employees, down from almost 11,000 in the year-ago period. Unfortunately, we don’t see any significant improvements on the horizon for the core business as we continue to question the sustainability of the high-margin search business. In our view, if YHOO can’t somehow turnaround search (and we don’t think that it can), it is going to struggle to grow margins meaningfully (even with lower headcount). We are modelling essentially flat annual EBITDA for the foreseeable future, as we don’t see a turnaround in the core."

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 $37.95 yesterday.

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