Yahoo! (YHOO) Re-Takes $15/Share Level After Analyst Says "Buy"

Shares of Yahoo! Inc. (Nasdaq: YHOO) are seeing new life today after Needham & Company upgraded the beleaguered online portal from Hold to Buy and set an aggressive $20 price target.

The upgraded has boosted shares of Yahoo by 0.8 percent to $15.01

Needham & Company analyst Mark May argues that the risk/reward profile on Yahoo! is now "favorable" and market expectations are "too low". He also claims there are some positive identifiable catalysts and management has a rewed focus on value.

May highlighted his eight main reasons he has turned bullish on Yahoo!:

• Valuation is only 3x EV/CY11 EBITDA and 6x EV/CY11 uFCF.
  
• Expectations are too low, 2Q/2H ests are achievable, and positive earnings revisions are likely
  
• Share repurchase accelerated in Q1 and Yahoo announced a new $3 billion authorization
  
• Taobao IPO withing the next 12-18 months could add approximately $1 per share in value.
  
• Asian investments, already worth more than $6/share, are on the upswing
  
• CEO Carol Bartz's compensation package highly incentivizes her to drive the stock higher
  
• Microsoft search deal begins to transition in 4Q10/1Q11, which should continue to drive significant margin expansion
  
• could be an attractive M&A target

While shares of Yahoo! are up today, they are still down 57 percent over a 5-year period. Shares are up over 20 percent since Carol Bartz took over as CEO in early 2009.

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