NEW YORK (TheStreet) -- Chinese ecommerce giant Alibaba will most likely file for IPO in the U.S., according to a Reuters report, after plans to list in Hong Kong collapsed. Yahoo! (YHOO), which owns 24% of Alibaba, surged to levels last seen in pre-crisis 2007.
Yahoo shares closed up 4.5% at $32.75 and 39.1 million shares changed hands compared to its one-month average daily volume of 13.93 million. Overall, Yahoo! outpaced the S&P 500 which was up 0.35%.
Alibaba's IPO is slated to be one of the most highly anticipated since Facebook's (FB) 2012 float. ABR Investment recently suggested Alibaba could have a $100 billion post-IPO valuation due to the recent magnitude of growth and revenue.
In the January-March quarter, Alibaba reported revenue of $1.38 billion, a 71% increase from the year-ago quarter, and net income of $669 million, up 203% on the year-ago quarter.
Whether Alibaba lists on the NYSE or Nasdaq is still to be determined.
TheStreet Ratings team rates Yahoo as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate Yahoo a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, notable return on equity, reasonable valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 95.64% 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 46.1% when compared to the same quarter one year prior, rising from $226.63 million to $331.15 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, Yahoo's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for Yahoo is currently very high, coming in at 83.87%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.16% is above that of the industry average.
- You can view the full analysis from the report here: YHOO Ratings Report
Written by Keris Alison Lahiff.