In a report published by Benchmark, Yahoo!'s (NASDAQ: YHOO) is raised to $18 on Asian growth.
Benchmark said that Yahoo's revenue growth remains stalled. “But it is consistently generating, and should grow, cash flow. Yahoo's Asian investments are growing rapidly and comparables garner high multiples. We raise our estimate for Yahoo's Asian assets value and take our Yahoo price target up $2 to $18 per share. But we maintain a Hold rating given sustained operating struggles and uncertainty around achievement of Asian value realization.
Yahoo (YHOO) shares rose after Greenlight Capital announced that it bought a stake in the Web portal, attracted by Yahoo's investment in China-based Alibaba.
Yahoo's stake in Alibaba ultimately may be worth as much as the company's entire current market value, Greenlight wrote in an April 29 letter to clients. The move helped send the shares up 44 cents to $18.14, reaching the highest level in more than a year.
The company "has taken some increasingly shareholder-friendly steps," Greenlight, which is run by David Einhorn, wrote in the letter. "We believe that Yahoo's most valuable asset is its 40 percent stake in Alibaba Group's still-private holdings."
Greenlight also cited Yahoo's cost-cutting measures in its decision to invest. CEO Carol Bartz, working for more than two years to turn the company around, has shed businesses and eliminated jobs. Yahoo backed away from competing with Google's (GOOG) search business by forging a partnership with Microsoft, saving money and improving cash flow.
While Yahoo had developed an "anti-shareholder reputation," beginning with its decision in 2008 to decline an acquisition offer from Microsoft, that has changed under Bartz's management, Greenlight said.
Jonathan Gasthalter, a spokesman for Greenlight, declined to comment. Dana Lengkeek, a spokeswoman for Yahoo, didn't respond to a message seeking comment. The Yahoo stake was reported earlier by website Market Folly.
Yahoo has gained 9.1 percent this year. Greenlight bought shares in the Sunnyvale company at an average price of $16.93, according to the letter. Yahoo has a market capitalization of about $23.6 billion.
First-quarter revenue, excluding sales passed on to partner sites, was $1.06 billion. That topped the average analyst estimate of $1.05 billion, according to data compiled by Bloomberg. Excluding some items, Yahoo had earnings of 19 cents a share, exceeding the average estimate of 16 cents.
talk about Greed.Good grief.Another BS story to get cheap shares.I saw the article and thought 25% ain't no way.Then after hours this comes out.What a bunch of BS.Somebody made some big bucks off of it.I just bought more at a discount.
Pretty much hit that 1st restance at 19.34 area...look to test that this afternoon and into close...not much in the way of $20.51 then looking to sell into that resistance...jmho and glta