In the midst of a stock market correction today, Oppenheimer raised its rating on Yahoo! to "buy" and lifted the price target to $27 from $22. Behind the increased bullishness was the fact that Alibaba (of which Yahoo! owns 24%) may go public with an IPO valued at a staggering $77 billion and Yahoo's increasing revenue from its search engine.
Another big reason Yahoo! is doing so well since Mayer's appointment is her financial decisions. After repurchasing $1.5 billion in shares in the fourth quarter, Yahoo! is still buying back shares at a quick pace.
According to the company's annual security filing, Yahoo! purchased $663 million of its stock in the first two months of 2013. That means since the beginning of November, it has repurchased almost $2.2 billion of its shares at an average price that's less than $19 a share. That's smart financial maneuvering!In a March 19 SEC filing, Mayer disclosed that after recently selling 19,264 shares of Yahoo!, she still owns 2,637,802 shares, which after today's 3.5% jump, she owns over $60 million in stock. Now that's what I call having personal experience as a vested shareholder! Jim Cramer and Stephanie Link actively manage a Real Money portfolio for his charitable trust -- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements. Her company's financial brinksmanship is powerfully illustrated in the following 1-year chart. Notice the correlation between the share price since Mayer's appointment as CEO and the company's return on invested capital. It's a lovely chart in both ways. YHOO data by YCharts
It is speculated that Yahoo! still has plenty of cash, which we'll learn more about when it next reports earnings April 15. By the way, Yahoo! hasn't had a quarterly earnings miss in the past four years. In the most recent four quarters, it has actually beaten earnings expectations by an average of almost 30%.
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