Why Yahoo! (YHOO) Stock Is Up in After-Hours Trading Today

NEW YORK (TheStreet) -- Shares of Yahoo!  (YHOO) rose 0.83% to $39.92 in after-hours trading Friday after Alibaba filed a report with the SEC to state it would price its IPO of 320 million shares at $66 a share.

The shares will be priced on Thursday, September 18 and will begin trading on the New York Stock Exchange on Friday, September 19 under the symbol BABA, according to CNBC.

The IPO would value Alibaba at up to $163 billion and the offering would total approximately $21 billion. If it reaches these figures, then this would be the largest IPO in U.S. history, as it would surpass Visa's  (V) IPO of $17.9 billion in 2008.

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Yahoo would sell 121.7 million shares of Alibaba in the offering.

Separately, 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Although YHOO's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.99, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $357.41 million or 8.03% when compared to the same quarter last year. Despite an increase in cash flow, YAHOO INC's average is still marginally south of the industry average growth rate of 17.69%.
  • Compared to its closing price of one year ago, YHOO's share price has jumped by 41.31%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.10%. Regardless of YHOO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YHOO's net profit margin of 24.87% compares favorably to the industry average.
  • You can view the full analysis from the report here: YHOO Ratings Report

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