NEW YORK (TheStreet) -- Shares of Yahoo! (YHOO) rose to a 52-week high of $44 in morning trading Monday after Reuters reported Alibaba, in which Yahoo! holds a 22% stake, plans to increase its IPO size due to "overwhelming" investor demand.
The Chinese e-commerce company debuted the initial public offering last week and investor demand was great enough to cover the entire deal in two days, according to the report.
Alibaba could break the world record for largest IPO if underwriters exercise an option to sell additional shares to meet demand, which could increase the IPO to $24.3 billion. This would beat the $22.1 billion record set by Agricultural Bank of China in 2010.
TheStreet's Brittany Umar has more on Alibaba's plan to boost its IPO price:
Alibaba and some of its shareholders offered 320.1 million American depositary shares at a range of $60 to $66 per share. Alibaba would likely file an amendment to its IPO Monday with an increased price range after talking to large U.S. mutual funds and institutional investors, according to Reuters.
Bloomberg previously reported Alibaba could increase the top end of its IPO range to more than $70.
Yahoo! holds a 22% stake in Alibaba and is set to receive a major windfall when the Chinese company goes public.
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 multiple 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 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 17.66%.
- Compared to its closing price of one year ago, YHOO's share price has jumped by 39.61%, 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
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.