Cantor Fitzgerald Maintains Buy On Yahoo Following Alibaba 2Q:CY14 Results


In a research report released today, Cantor Fitzgerald analyst Youssef Squali reiterated a Buy rating on Yahoo (YHOO) with a $39 price target, following Alibaba’s 2Q:CY14 financial results, which were better than feared and are positive for YHOO’s 23% stake in the company. 

Squali noted, “YHOO shares were pressured somewhat last quarter when Alibaba reported that revenue growth decelerated to 38.7% in 1Q:CY14 from 61.7% in 4Q:CY13. Given 2Q:CY14’s 760bps re-acceleration, we believe that some of the more bearish scenarios calling for further deceleration in top-line growth are now off the table.” 

The analyst explained his price target saying, “Our SOP analysis yields ~ $25/share for Yahoo!’s ~23% stake in Alibaba (fully taxed), ~$4.80/share for YJ, ~$4.20/share in cash, and only ~$4.50/share for core Yahoo! Excluding Asian Assets, YHOO trades at 1.2x EV/Revenue and 4.3x EV/EBITDA on our 2014 estimates.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 35.2% and a 83.8% success rate. Squali has a 13.2% average return when recommending YHOO, and is ranked #2 out of 3264 analysts.

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