Jefferies’ Brian Fitzgerald estimated the value of five key assets held by Yahoo! Inc.
Fitzgerald downgraded the rating on Yahoo from Buy to Neutral, while raising the price target from $43 to $48.
The analyst continues to remain focused on Verizon Communications Inc.
According to the Jefferies report, using SOTP analysis, Yahoo Core was valued at $3.8-$4.8 billion, Cash & Marketable Securities at $7.7 billion, Alibaba at $13 billion–$43 billion, YJ at $4.1 billion–$6.6 billion and the Excalibur Patent Portfolio at $0.6 billion–$1.2 billion.
The Bull & Bear Case
Fitzgerald mentioned that in an upside scenario, where Alibaba and YJ are spun off in a tax efficient manner, the price target could reach $66, while a downside scenario would take the price target to $30.
However, the analyst stated, “Given the limited ability for YHOO management to come to a solution over the past 4+ yrs we have little insight into the ability to reach a tax efficient spin.”
In the downside scenario, Fitzgerald assumes a $1 billion write down of Yahoo core for the Verizon acquisition. Therefore, the closing of the acquisition at the announced price of $4.8 billion is awaited.
“Yahoo shared engagement trends which highlighted the lack of a fallout from usage following the Sept email hack announcement. There could be downside if VZ determines there was a material withholding during due diligence,” the analyst cautioned.
At last check, Yahoo was down 1.42 percent at $41.78.
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|Oct 2016||MKM Partners||Maintains||Buy|
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