Bank of America increased its price target on shares of Yahoo! to $38 as the upcoming Alibaba IPO well allow the company to unlock more shareholder value. Shares of Yahoo! were also lower with the general markets today, falling 0.4%.
From BoA: Yahoo!: Alibaba IPO optimism will keep building – Raising PO to $38 9/30/2013 7:05 AM
We are raising Yahoo's price target to $38 based on an updated 2015 Alibaba valuation and higher Yahoo EBITDA multiple. We conservatively estimate Alibaba 2015 net income at $5.2bn (using 35% margins) and use a 20-30x multiple to value Alibaba. Yahoo recently indicated users are now growing, addressing an overhang, and we are raising our EBITDA multiple to 6x.