NEW YORK (TheStreet) -- Shares of Yahoo! Inc (YHOO) were lower by 2.67% to $40.94 in late afternoon trading Thursday, after analysts at Capstone said the spin-off of Alibaba Group Holding (BABA) is unlikely to be approved.
Analysts at the firm believe that the Internal Revenue Service, along with the Treasury Department, will not approve the proposed tax-free spin-off of the company's stake in the Chinese ecommerce retailer.
Capstone added that the tax-free spinoff is already priced into shares.
The unfavorable change in the tax code could hurt the stock. The firm says it could result in more than an $11 per Yahoo share for tax expense on the spin-off transaction.
Sunnyvale, Calif.-based Yahoo! is a global technology company, delivering digital content and experiences, across devices and globally.
The company provides online properties and services to users, as well as a range of marketing services.
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 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."