William Blair Maintains Market Perform On Yahoo On Weak Core Business Fundamentals

In a research report issued yesterday, William Blair analyst Ralph Schackart maintained a Market Perform rating on Yahoo (YHOO), following  2Q14 report where YHOO’s net revenue of $1.04 billion was below the consensus estimate of $1.08 billion. Management provided third-quarter net revenue and EBITDA guidance below expectations. Yahoo also reported that display advertising price per ad declined year-over-year for the sixth consecutive quarter because of a delay in the transition to the Yahoo Ad Manager Plus buying platform and softness in premium ad sales. No price target was assigned.

Schackart wrote, “We remain cautious about the company’s display business (38% of second-quarter net revenue) because of the industry shift toward programmatic buying. In our view, real-time bidding is the primary reason Yahoo’s price-per-display advertisement declined year-over-year for a sixth consecutive quarter. Our belief is that the market continues to move toward programmatic buying, not away from it, as advertisers realize pricing efficiencies and better targeting capabilities. We maintain our Market Perform rating given Yahoo’s weak core business fundamentals, while recognizing that Alibaba is driving accelerating net income results and maintaining investor interest”.

According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Ralph Schackart currently has a one-year average return of 20.2% and an 81% success rate. Schackart is ranked #341 out of 3215 analysts.

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