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Marissa Mayer's Yahoo! Still Has Questions

Stocks in this article: YHOO AAPL GOOG MSFT FB

NEW YORK ( TheStreet) -- It's been a year since Yahoo! (YHOO) gave the CEO suite to Marissa Mayer. After several acquisitions and a re-energizing of the company and its employees, it's time for Mayer to demonstrate that Yahoo!'s turnaround is for real.

Sunnyvale, Calif.-based Yahoo! has experienced an incredible run in its share price performance since Mayer took over, but that's largely due to the continued monetization of its Asian assets, a huge share buyback, and continued optimism in the new CEO.

Revenue growth at core Yahoo!, however, which includes search, and display advertising, has largely been lackluster. That's not expected to change this quarter, says Cantor Fitzgerald analyst Youssef Squali. "We expect Yahoo!'s 2Q results to be in-line with muted expectations on Tuesday, 7/16," Squali wrote in his note. "Operationally, 2013 remains a year of investments and acquisitions, setting the stage for what we believe will be a resumption of growth in 2014." Squali rates shares "buy" with a $30 price target.

Analysts polled by Thomson Reuters expect Yahoo! to earn 38 cents a share on sales of $1.074 billion. Analysts surveyed by Estimize are looking for 34 cents a share on $1.09 billion in revenue.

Mayer is trying to turn around core Yahoo!, and is doing it largely through acquisitions. The most notable was the recent $1 billion purchase of Tumblr. However, some smaller acquisitions, including Summly and Jybe, are also part of the Yahoo! turnaround plan.

These acquisitions aim to rebuild Yahoo!'s core, which includes search and display, and take advantage of the company's 700 million unique visitors per month. Some of Yahoo!'s properties, including Finance, and Sports, are amongst the most visited properties on the Web, but revenue growth remains stagnant. Topeka Capital Markets analyst Victor Anthony, who rates shares "buy," believes that traffic has firmed. "Traffic trends have firmed in the quarter and the recent spate of acquisitions and programming content deals signals bold steps to improve the core," Anthony wrote in his report.

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