NEW YORK (TheStreet) -- Yahoo (YHOO) shares were upgraded to "outperform" from "neutral" by analysts at Macquarie on Tuesday.
The firm raised the price target on the company's stock to $40 from $37.50.
Yahoo is up 1.1% to $33.80 in early market trading today.
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The firm cites a combination of the recent 17% pullback on the shares and the upcoming IPO of Alibaba -- the Chinese e-commerce site of which Yahoo is part owner -- as reasons for the upgrade.
"Given the 17% pull back in shares since hitting their recent high of $40.15 on March 5 (vs. 3% for S&P 500), we believe that investors should buy YHOO ahead of the expected upcoming Alibaba IPO. Our target does not anticipate improvement in the core business but our new valuation of Alibaba at $160-$180bn combined with the recent pullback offers investors an attractive entry point," Macquarie analysts said.
- Powered by its strong earnings growth of 43.47% and other important driving factors, this stock has surged by 38.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, YHOO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Although YHOO's debt-to-equity ratio of 0.08 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.30, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for YAHOO INC is currently very high, coming in at 83.75%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.50% is above that of the industry average.
- Net operating cash flow has significantly increased by 118.30% to $347.73 million when compared to the same quarter last year. In addition, YAHOO INC has also vastly surpassed the industry average cash flow growth rate of 11.64%.
- You can view the full analysis from the report here: YHOO Ratings Report
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