BGC Financial analyst Colin Gillis downgraded his rating on Yahoo to Hold from Buy
Amid today's market rally, Yahoo shares are in the red after BGC Financial analyst Colin Gillis downgraded his rating on the stock to Hold from Buy. Noting that Yahoo's stock has jumped 43% since May 2012, Gillis wrote that Yahoo! faces headwinds as it tries to increase the revenue generated by its core business. These obstacles may cause the Internet giant's stock to drop over the next few months, the analyst wrote in his note to investors. Changes the company made to its sales team are likely to weigh on the company's display revenue, Gillis stated. After Yahoo! reorganized its sales team in 2011, the company reported poor results for its June quarter and cited the changes as the reason for the weakness, Gillis noted. Another possible drag on the stock is a reduction in Yahoo!'s earnings from its Asian assets, as the company has reduced its stake in Chinese Internet giant Alibaba, the analyst added. Furthermore, Yahoo's search revenue sharing deal with Microsoft (MSFT) is set to expire at the end of March, and the looming expiration may weigh on Yahoo's guidance, Gillis contended. Yahoo! may begin buying companies at a faster pace, possibly impairing its ability to buy back more of its own shares, he stated. Gillis maintained a $21 price target on the shares. In early afternoon trading, Yahoo lost 0.6% to $22.