Alibaba now appears to be even more valuable, based on the projections of some analysts. UBS analyst Eric Sheridan, who has a buy rating on Yahoo, on Friday hiked his price target to $37 from $30, partly based on his elevated Alibaba valuation.
“We believe Alibaba is likely seeking to IPO at a $100 billion valuation – above our prior $70 billion estimate,” he wrote in his note to clients. Only the uninformed continue to think Alibaba could IPO at as low as $70B.
Sheridan said in his report that he believes Alibaba could bring in $100 billion in its IPO, up from his previous estimate of $70 billion. Yahoo will have to sell half its stock in Alibaba in an IPO according to its investor agreement.
“Yahoo may be able to conduct a second sale in a more tax-efficient manner,” Sheridan wrote. “In total, this implies an $18.7 billion post-tax value for Yahoo’s entire Alibaba stake — or $17.10 per share.” Sheridan believes the Alibaba IPO could happen by early 2014.