Oppenheimer Maintains Buy On Yahoo!; Raises Price Target To $48 On Alibaba Public Valuation

In a research report issued today, Oppenheimer analyst Jason Helfstein maintained a Buy rating on Yahoo! Inc. (NASDAQ:YHOO) and raised his price target to $48 (from $43), based on the public valuation of BABA shares and rolling-forward to 2016 estimates.

Helfstein noted, “On Friday, BABA shares closed at $93.89, 36x 2015E net income. As a result, we are increasing our 12-18 month valuation of BABA to $275B, based on 30x 2016E net income. Our 2016 multiple for BABA shares is modestly above that for Tencent and BIDU, which trade at 28x 2015E EPS. Our current sum-of-the-parts (SOTP) price target implies 17% upside, and we are maintaining our Outperform rating. Separately, our “taxadvantaged” scenario suggests a $60 valuation, assuming a 15% “payment” instead of 38% taxes.”

The analyst added, “Assuming 15% “payments” to Alibaba and Softbank to effect tax-free spins, this suggests a “bull-case” valuation of $60 per share. However, as long as YHOO mgmt has access to cash, we believe investors will significantly discount this in the share price.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jason Helfstein has a total average return of 20.2% and a 64.6% success rate. Helfstein has a 28.3% average return when recommending YHOO, and is ranked #109 out of 3309 analysts.

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