Yahoo! (YHOO) may discover a tax-efficient way to monetize its stake in Alibaba (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report, a Chinese e-commerce firm, once its deal with Verizon Communications (VZ) - Get Verizon Communications Inc. Report closes in June, UBS noted today.
Verizon struck a deal to acquire Yahoo! last July. However, not part of that deal is Yahoo's 15% stake in Alibaba as well as a 35% interest in Yahoo! Japan.
After the Verizon deal closes, Yahoo! will be renamed Altaba, a holding firm.
UBS analyst Eric Sheridan has now raised his price target on Yahoo!'s stock to $58 from $50 on the basis that Altaba management will "squarely focus" on Alibaba.
"We anticipate that the Altaba management will squarely focus on maximizing the tax efficiency of any disposal of its Alibaba and Yahoo Japan stakes post the core sale," Sheridan noted. "Based on our extensive expert conversations, we believe there are precedent tax-efficient structures that could reasonably be pursued."
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