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By Angus Robertson

Improved earnings and disappointing revenues at Yahoo! (YHOO) cancelled each other out, leading most analysts tracked by Alacra Pulse to leave their 12-month price targets unchanged.

As a result the median for sell-side analyst remains at $19. However, when independent analysts are included, the median drops to $18, also unchanged from a month ago.

The mean price target of sell-side and independent analysts tracked by Alacra Pulse stands at $18.04, up slightly from $17.90, and 14% above Wednesday’s closing price of $15.80.

Current 12-month price targets of selected sell-side and independent analysts. Click image to enlarge.


Needham’s Mark May is one of the more bullish analysts following Yahoo!, with a Buy recommendation and a $20 target.“We continue to believe the current valuation under-estimates the value of the Yahoo! franchise, its off-balance sheet assets, and the potential to improve user engagement through recent partnerships and product enhancements,” he wrote in a note Wednesday.

Caris & Co.’s Sandeep Aggarwal also has a $20 target and a Buy rating: “We believe that Yahoo has many underappreciated assets (especially Asian assets), sizable cash on the balance sheet, improving cash flow generation, and all those factors screen well for a possible P/E deal,” he wrote.

Some analysts and investors are disappointed by the pace of change under CEO Carol Bartz, but Trip Chowdhry at Global Equities Research is one of the more positive independent analysts, with a buy rating on the stock. “Yahoo has been in a sleeping mode for the last eight years,” said Chowdhry, whose firm owns no stock in Yahoo. “And it takes time to undo the status quo.”

Several analysts seem to be banking on the likelihood of some kind of deal to unlock the value in Yahoo’s assets. One of them is Susquehanna’s Marianne Wolk, who has a Positive recommendation on the company and a price target of $19: “We believe the probability of some transaction that releases the value of its Asian assets is high and do not rule out other value-creating events.”

“It would make sense if they did something with AOL (AOL) because the business is at the point where it’s a game of scale,” said UBS analyst Brian Pitz, who has a $15 target and a Neutral rating.

Oppenheimer’s Jason Helfstein thinks the stock is trading on: ‘Does something happen with the company?’ He has a Perform rating and an $18 target.

Among the few changes since last month: Ross Sandler of RBC Capital Markets raised his target to $20 from $19 and Lou Kerner of Wedbush Securities upped his to $14.50 from $13.25. As a result Deutsche Bank’s Jeetil Patel now has the lowest target at $13.50, with a Hold rating. He says Yahoo! continues to face structural issues such as underinvestment.

JP Morgan’s Imran Khan trimmed his target to $20 from $21, but still holds an Overweight rating.

Morningstar’s Larry Witt continues to believe that a transaction involving AOL is unlikely to happen due to its complexity and Yahoo’s antitakeover provisions. “Yahoo’s third-quarter results confirm our thesis that Yahoo will struggle to drive revenue growth, “ he added.

Zacks is encouraged by the efforts of management to turn the company around, but sees no short term catalysts and maintains a Neutral outlook.

(Sources: Alacra Pulse, MarketWatch, Reuters, MercuryNews, Bloomberg, Morningstar, Zacks.)

Source: Analysts Sit Tight on Yahoo Price Targets