Yahoo Inc. YHOO +0.88% was upgraded to buy from hold on Tuesday by analysts at Cantor Fitzgerald, who said they believe the firm has stabilized its underlying operations. Additional factors for the upgrade are the material re-valuation of Yahoo's Asian assets and the likelihood of an $1.5 billion active buyback by the firm, the analysts said. The analysts raised their target price for Yahoo to $26 from $21, after adjusting the Alibaba/Yahoo Japan valuation on new disclosures. Alibaba is Yahoo's strategic partnership in China and financial results show 74% growth in revenue and 111% growth in operating income for 2012, noted the analysts. Yahoo Japan has continued to outperform since then end of 2012 when Yahoo increased its stake, said the analysts. Management comments at recent events have indicated more buybacks are ahead. Yahoo shares rose more than 1% in pre-market trading.
Increased Asian assets valuation, stabilized underlying business operations, and continuation of share buybacks, why YHOO PT is upgraded to $26. To go $30's, MM should show Wall Street sustainable business operation along with increased revenue and earnings. $25 per share is the bag though!
Sentiment: Strong Buy