Analyst Thinks Bartz's Comments Don't Rule Out Yahoo!/Microsoft Deal

Collins Stewart is out with a research note today considering comments made by Yahoo!'s (Nasdaq: YHOO) new CEO, Carol Bartz, in which she said that her "gut instinct is not to sell Yahoo!'s search business". While the comments first seemed to rule out a deal with Microsoft (Nasdaq: MSFT), the analyst report argues otherwise. Collins Stewart reiterates its Buy rating and $18 price target on Yahoo!.

The firm believes Ms. Bartz's comment could indicate that she may want to structure a deal with Microsoft that would allow Yahoo! to stay in the search business. Collins Stewart points out that if "Ms. Bartz's first deliverable was to rule out a possible Microsoft deal, Yahoo! did not require a new CEO to do that." The firm believes that a search deal of this kind is "very likely and can give $8-$10 per share lift to Yahoo!."

Collins Stewart sees several possible ways to structure a deal between the to tech company, but sees the most likely deal as structured similarly to a Google (Nasdaq: GOOG) AdSense search deal plus "delivering exclusivity/long-term visibility to Microsoft."

Shares of Yahoo! are down more than 7% today, most recently trading at $11.50.

Yahoo! Inc. provides Internet services to users, advertisers, publishers, and developers worldwide.

You May Also Be Interested In

• Susquehanna Downgrades Greenbrier Companies (GBX) to Neutral
• Baker Hughes (BKR) PT Raised to $77 at TD Cowen
• Elevance (ELV) PT Raised to $482 at Bernstein SocGen