Seeking Alpha suggests that a price of 18 would fairly price Yahoo even with the possible asset sales or transactions.
Price Target: The consensus price target for the analysts who follow Yahoo is $18. That is upside of 14% from Yahoo’s current stock price. That doesn’t seem like a lot of upside particularly since it incorporates the possibility of a buyout.
Valuation: Yahoo’s 5-year trailing valuation metrics suggests that the company is slightly undervalued to fairly valued. Yahoo’s current P/S ratio is 3.8 and it has averaged 3.9 over the past 5 years with a high of 6.5 and a low of 2.4. Yahoo’s current P/B ratio is 1.6 and it has averaged 2.3 over the past 5 years with a low of 1.3 and a high of 4.8.
Forward Valuation: Analysts forecast that Yahoo will earn $0.89 next year. With a current stock price of $15.64, that is a forward P/E multiple of 17.6. Google is trading at a forward P/E multiple of 15.0. Yahoo’s EPS is projected to grow 10% next year while revenue is projected to grow 3.4%. Google is forecast to post 19% EPS growth and 22.9% revenue growth. Based on Google’s valuation, Yahoo seems to be trading at a very rich multiple considering its expected growth is nowhere near Google’s.