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Analyst lifts Yahoo rating, price target, stock up

NEW YORK (AP) -- Yahoo crept close to its 52-week high on Thursday, as an Oppenheimer analyst boosted his rating and price target for the Internet company — partly because of the value of its Asian assets.

THE SPARK: Analyst Jason Helfstein raised Yahoo Inc. to "Outperform" from "Perform" and increased its price target to $27 from $22.

THE BACKGROUND: Over the past four years, Yahoo's revenue has dropped about 30 percent, to $5 billion last year, as rivals Google and Facebook scooped up more online advertising. The Sunnyvale, Calif., company hired Marissa Mayer, a well-known Google executive, to revitalize its business last year.

THE ANALYSIS: Helfstein echoed sentiments similar to those of Cantor Fitzgerald analyst Youssef Squali earlier this month. In a client note Helfstein said Yahoo looks to gain from the increasing worth of its stake in Chinese Internet company Alibaba. Yahoo sold half of its stake in Alibaba last year for $7.6 billion and still has about 23 percent of the Chinese company. Helfstein believes that Alibaba is now worth $10.18 per share, up from a previous estimate of $4.70 per share. The analyst thinks Alibaba will complete an initial public offering within the next year with a $77 billion valuation.

Helfstein also raised his 2013 and 2014 search revenue estimates for Yahoo because of Google toolbar policy changes. The analyst said he believes, based on talks with industry experts and channel checks, that big toolbar/application companies with non-exclusive deals with Google have shifted at least half of their business to other search providers like Yahoo and Bing.

SHARE ACTION: Yahoo rose 68 cents, or 3.1 percent, to $22.78 in midday trading. The stock has traded between $14.59 and $23.09 over the last year. Earlier in the session, Yahoo's shares reached $22.95. For the year to date, the stock is up 11 percent.