Yahoo! Inc. (NASDAQ: YHOO)
Yahoo! is having an incredible day in the market today after announcing that it may be selling its web business. Today, we’ll talk about the details of what Yahoo! is considering, how the market is reacting to the news, and what we can expect to see from YHOO moving forward.
Yahoo! Meets To Discuss The Sale Of It’s Core Business
YHOO has been long known as a online search engine with an incredibly strong web business. However, as mentioned above, the company is considering selling it’s core web business. The discussion revolving around the idea is happening in a meeting that will start today and last through Friday. During the meeting, YHOO will also be discussing how to maximize the value of its stake in the online giant, Alibaba. In a statement, Jim Cramer had the following to offer with regard to the sale of the core web business:
“I think that the core business of Yahoo! is continually underestimated and that the touch that comes back from search, from Yahoo! Sports, from TV and from finance is vastly undervalued, ludicrously undervalued for someone who really wants to take share and grow.”
How The Market Is Reacting To The News
While some see the idea of Yahoo! selling its core online business as a bad thing, the overall consensus among investors seems to be positive. This can be seen by looking at the activity on the stock. Currently (10:17), YHOO is trading at $35.69 per share after a gain of 5.87% so far today.
What We Can Expect To See From YHOO Moving Forward
Moving forward, I’ve got a bit of a mixed opinion of YHOO. If the company does decide to sell its core business, we can expect to see strong short term growth, but the long term view may be very different. However, if YHOO decides to not to sell the web business, we can expect to see short term declines, but in the long run, it would be a great move. As mentioned by Cramer, Yahoo’s web business is a severely underestimated revenue generator. Personally, I don’t think the company should get rid of it.
Out of 23 analysts covering Yahoo! Inc. (NASDAQ:YHOO), 16 rate it “Buy”, 0 “Sell”, and 7 “Hold”. This means 70% are positive. $62 is the highest target while $32 is the lowest. The $42.45 average target is 19.44% above today’s ($35.54) stock price. Yahoo! Inc. was the topic in 55 analyst reports since July 22, 2015 according to StockzIntelligence Inc. Oppenheimer maintained the stock on October 21 with an “Outperform” rating. RBC Capital Markets maintained it with a “Sector Perform” rating and $42 target price in an October 21 report. Cowen & Co maintained the shares of YHOO in a report on October 21 with a “Market Perform” rating. Morgan Stanley maintained the firm’s rating on October 21, an “Overweight” rating and $49 price target. Finally, Jefferies maintained the stock with a “Buy” rating in an October 21 report.
The institutional sentiment decreased to 1.03 in 2015 Q2. Its down 0.01, from 1.04 in 2015 Q1. The ratio is negative, as 92 funds sold all Yahoo! Inc. shares owned while 232 reduced positions. 83 funds bought stakes while 251 increased positions. They now own 635.68 million shares or 1.40% less from 644.72 million shares in 2015Q1.
Indaba Capital Management LP holds 27.75% of its portfolio in Yahoo! Inc. for 1.69 million shares. Owl Creek Asset Management LP owns 10.70 million shares, or 22.57% of their US portfolio. Stonehill Capital Management LLC has 21.86% invested in the company for 1.33 million shares. The United Kingdom-based Davide Leone & Partners Investment Co LLP has invested 12.48% in the stock. Courage Capital Management LLC, a Tennessee-based fund, reported 550,000 shares.
What Do You Think?
Where do you think YHOO is headed moving forward? Let us know your opinion in the comments below!
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