Many Strategic Questions Remain for Yahoo! (YHOO) Following Abandonment of Alibaba Spin - Cowen
Cowen and Company affirms Yahoo! (Nasdaq: YHOO) with a Market Perform rating and $35 price target following asset spin-off news this morning.
Analyst John Blackledge summarized: This morning, YHOO announced that it will abandon the proposed Alibaba (BABA) spin originally slated for next month and that it will now pursue a reverse spin strategy. Concerns with a tax-liability overhang post-spin led to the change in course. While this near-term tax concern is alleviated, many strategic questions remain, in our view.
On the stock reaction: While the decision not to spin BABA relieves near-term questions about a tax liability attached to the BABA stake, investors are back at square one with a new process perhaps a year away. In the meantime, trends at the core business are yet to stabilize and we will learn more details about the recent strategic review at 4Q earnings in January.
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