Citi Cuts AOL (AOL) to Neutral; Analyst Sees Better Value in Yahoo! (YHOO) and eBay (EBAY)

(Updated - November 6, 2014 3:09 PM EST)

Citi downgraded AOL, Inc. (NYSE: AOL) from Buy to Neutral with a price target of $45. The change follows Q3 results. Analyst Mark May sees better opportunity in Yahoo! (NASDAQ: YHOO) and eBay (NASDAQ: EBAY).

"AOL reported what we’d characterize as a low-quality quarter, and the outlook for growth remains modest. Given this backdrop and our view that there are more attractive value/GARP ideas in our universe (e.g., YHOO, EBAY), we are downgrading to Neutral from Buy," said May.

"At current levels, AOL has an EV of $3.5bn and trades at 6.4x our EV/adj. EBITDA, 9x EV/FCF, 18x adj. P/E and 22x GAAP P/E (CY15 ests). While these are low relative to many Internet companies, it is commensurate with AOL’s growth and profitability. We view YHOO and EBAY as more attractive value/GARP ideas in our universe given both have impending catalysts and attractive valuations (4.5x and 9.0x CY15 EV/EBITDA, respectively) relative to growth and profitability," he added.

For an analyst ratings summary and ratings history on AOL, Inc. click here. For more ratings news on AOL, Inc. click here.

Shares of AOL, Inc. closed at $43.87 yesterday.

You May Also Be Interested In

• Citi Upgrades United Microelectronics Corp (2303:TT) (UMC) to Buy 'with limited downside'
• Wolfe Research Downgrades Warner Brothers Discovery (WBD) to Underperform, 'out of concern that an incipient advertising downturn put guidance at risk'
• Bunge (BG) PT Raised to $122 at Citi