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YHOO - the bull case
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Yahoo: Bernstein Says Company Worth Almost $39 A Share In A Break Up-But Also Doubts It Will Happen
Thatâs the conclusion reached by Bernstein Research analyst Jeffrey Lindsay in a provocative new report this morning. He does a sum-of-the-parts analysis of the company, and concludes Yahoo could be worth as much as $39 a share it was broken apart. And he says there is another scenario - which he has previously outlined - in which the stock could get to a $45 valuation. But he also thinks CEO Jerry Yang will follow neither of those paths, and instead will take a âstay-the-courseâ strategy. With the current approach, he says, âYahooâs value is locked into a much lower range,â which he puts at $25, or below the current stock price.
And here we have the irony of the stock move today: Lindsay has triggered it, but he keeps his rating at Market Perform, with a below-market target price.
Hereâs his break-up scenario:
* Display advertising business, estimated value of $25.488 billion, using comparable valuations for Right Media, aQuantive and Doubleclick.
* Search business, estimated value $15.566 billion, based on various valuation measures for Google (GOOG) and IAC/Interativeâs (IACI) Ask.com.
* Subscriptions, estimated value $1.288 billion, using as comparables Match.com, RealNetworks and Earthlink.
* Net cash: $1.642 billion.
* Yahoo Japan stake: $7.795 billion.
* Alibaba stake: $1.878 billion.
* Net operating loss carryforwards: $595 million.
That gets you a total value of $54.252 billion; divide by 1.404 billion shares, and you get $38.65 a share.
Last month, Lindsay wrote another report which proposed that Yahoo outsource paid search, cut headcount by 25% and restructure its display ad business; he thinks that approach could yield a $45 a share valuation.
Meanwhile, Lindsay writes that for the upcoming third quarter report, he expects Yahoo to report revenue of $1.213 billion, below the consensus of $1.239 billion; guidance was for $1.175 billion to $1.31 billion. He sees 8 cents a share in EPS, in line with the consensus.
Yahoo today is up 75 cents at $27.90.
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38,65 $ ?....45 $ ? Hmmmm....let´s see...
Thatâs the conclusion reached by Bernstein Research analyst Jeffrey Lindsay in a provocative new report this morning. He does a sum-of-the-parts analysis of the company, and concludes Yahoo could be worth as much as $39 a share it was broken apart. And he says there is another scenario - which he has previously outlined - in which the stock could get to a $45 valuation. But he also thinks CEO Jerry Yang will follow neither of those paths, and instead will take a âstay-the-courseâ strategy. With the current approach, he says, âYahooâs value is locked into a much lower range,â which he puts at $25, or below the current stock price.
And here we have the irony of the stock move today: Lindsay has triggered it, but he keeps his rating at Market Perform, with a below-market target price.
Hereâs his break-up scenario:
* Display advertising business, estimated value of $25.488 billion, using comparable valuations for Right Media, aQuantive and Doubleclick.
* Search business, estimated value $15.566 billion, based on various valuation measures for Google (GOOG) and IAC/Interativeâs (IACI) Ask.com.
* Subscriptions, estimated value $1.288 billion, using as comparables Match.com, RealNetworks and Earthlink.
* Net cash: $1.642 billion.
* Yahoo Japan stake: $7.795 billion.
* Alibaba stake: $1.878 billion.
* Net operating loss carryforwards: $595 million.
That gets you a total value of $54.252 billion; divide by 1.404 billion shares, and you get $38.65 a share.
Last month, Lindsay wrote another report which proposed that Yahoo outsource paid search, cut headcount by 25% and restructure its display ad business; he thinks that approach could yield a $45 a share valuation.
Meanwhile, Lindsay writes that for the upcoming third quarter report, he expects Yahoo to report revenue of $1.213 billion, below the consensus of $1.239 billion; guidance was for $1.175 billion to $1.31 billion. He sees 8 cents a share in EPS, in line with the consensus.
Yahoo today is up 75 cents at $27.90.
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38,65 $ ?....45 $ ? Hmmmm....let´s see...
Here is 10/5/2007 YHOO Gap chart...
Two potential Gap Scenarios...
1. Exhaustion Gap: If no follow through and Closes (Daily) below Gap's Low (26.90).. Could move lower to 24-25 area...
2. Continuous Gap: If Closes (Daily) above Gap's High (28.16) ... Could move higher to 32-33 area
Also, YHOO Earnings: Oct. 16, 2007 ??
Regards,
suri
Two potential Gap Scenarios...
1. Exhaustion Gap: If no follow through and Closes (Daily) below Gap's Low (26.90).. Could move lower to 24-25 area...
2. Continuous Gap: If Closes (Daily) above Gap's High (28.16) ... Could move higher to 32-33 area
Also, YHOO Earnings: Oct. 16, 2007 ??
Regards,
suri
i would be inclined to somewhat agree with Surinote's post. the other big factor in TA is that on 10/5 yhoo gapped and closed above its 200 day sma. if for the next 5 days it can continue to close above the 200 sma, and it doesn't tank after earnings on 10/16, i think it will attract the attention of mutual funds beging to move much higher..
however, i know this stock very well, and i also know that using pure TA to trade yhoo can be painful. there has been a lot of positive news surrounding yhoo lately (you need to do your own research) so maybe its in anew uptrend that will last. a lot depends on what yhoo mgmnt says in the earnings call on 10/16, most are not expecting a big beat, just a meet, but its the foward guidance that it is the key.
the other biggie is that yhoo's investmemnt in china's Alibaba group is about to pay off big. yhoo's balance sheet is about to get a major shot in the arm in the next 3-6 weeks.
however, i know this stock very well, and i also know that using pure TA to trade yhoo can be painful. there has been a lot of positive news surrounding yhoo lately (you need to do your own research) so maybe its in anew uptrend that will last. a lot depends on what yhoo mgmnt says in the earnings call on 10/16, most are not expecting a big beat, just a meet, but its the foward guidance that it is the key.
the other biggie is that yhoo's investmemnt in china's Alibaba group is about to pay off big. yhoo's balance sheet is about to get a major shot in the arm in the next 3-6 weeks.
I think it yahoo to be bearish for monday 10/8/07 because the gap up wasnt made on alot of volume, the spread is narrow, and it closed low. To me that all signifies that the gap up is a gap to take out stop losses. However, IMO there is one immediate thing that does indicate strenght. The preceeding bar was a down bar on low volume thereby indicating little supply which would mean strenght. However, I lean more towards being bearish because the next bar 10/5 while it is a gap up bar it wasnt made on enough volume (although there was a slight increase in the vol as opposed to the previous bars 10/4 vol) to indicate that smart money is backing the gap up move. Therefore, I maintain that it is a gap up to take out the stoplosses and engineer a higher up shorting place for the deep pockets. I could be wrong but i think over the next 2 days we could see it drop in price.
On the other hand RIMM is an example of a gap up that I think indicates strenght. Wide spread, strong vol, closes near high, increase in vol from previous day..etc.
Two different Gap senarios. I would be bearish on Yahoo and bullish on RIMM. Granted I could be wrong on both! I guess monday will tell the tale. One could always reverse position if wrong about the markets and do so quickly.
On the other hand RIMM is an example of a gap up that I think indicates strenght. Wide spread, strong vol, closes near high, increase in vol from previous day..etc.
Two different Gap senarios. I would be bearish on Yahoo and bullish on RIMM. Granted I could be wrong on both! I guess monday will tell the tale. One could always reverse position if wrong about the markets and do so quickly.