JMP Securities had a "fireside chat" with Yahoo! CFO Ken Goldman on Monday. The firm maintained its "market perform" rating but stated it would monitor the company's operations before it would upgrade the stock.
"We believe Yahoo! is focused more on revenue growth now that overall engagement is growing and as many of its products have been revamped and some of the key drivers of this growth are likely to come from Tumblr monetization, a ramp in Stream ads, mobile, and video, among others," the firm said in a research note. "Other takeaways from our fireside chat include: 1) Search & Yahoo!'s continued investment here; 2) that 'acqui-hires' are likely to continue, but that Yahoo! may be looking at larger, more meaningful acquisitions to drive revenue growth; 3) a disciplined investment cycle; and 4) that buybacks are likely to continue.
"We continue to look for more tangible signs of operational improvement at Yahoo! before we can become more positive on shares, although we recognize the value of Yahoo!'s Asian assets."
Bank of America, meanwhile, noted Yahoo! could trade up to $45 after the firm predicted that Alibaba, a Chinese e-commerce company in which Yahoo! owns a 24% stake, could launch an IPO within the next two months.
TheStreet Ratings team rates YAHOO INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate YAHOO INC (YHOO) a BUY. This is driven by several positive factors, 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, increase in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 43.47% and other important driving factors, this stock has surged by 81.80% 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 exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 27.9% when compared to the same quarter one year prior, rising from $272.27 million to $348.19 million.
- 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 3.27, 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.
- You can view the full analysis from the report here: YHOO Ratings Report