Suddenly, Yahoo (YHOO) investors are looking a little jumpy. The company’s shares have been soaring in recent sessions, following stronger-than-expected financial results earlier this month, and anticipation of a windfall from the IPO for Alibaba.com, a unit of Alibaba Group, a holding company for various Chinese Internet businesses which is 39% owned by Yahoo. But Monday the stock reversed course.
In a research note Friday, American Technology Research analyst Rob Sanderson raised his price target on the stock and said Yahoo’s holdings in Alibaba could add $13-$15 in value to Yahoo in 3-4 years. Monday morning, Merrill Lynch analyst Justin Post wrote a similar note, raising his estimate on the value of Yahoo’s holdings in Alibaba, Yahoo Japan and Korea’s Gmarket to $11 a share from $8. Post raised his fair value estimate for Yahoo to $36 from $33, but also repeated his Neutral rating on the stock. Post writes that he expects “ongoing investment margin pressure in 2008″ and asserts that Yahoo’s core business does not deserve to trade at a premium to Google (NASDAQ:GOOG) on a P/E basis. Any price above $34 implies a premium, he writes.
According to Bloomberg, the Alibaba.com IPO priced Monday in Hong Kong at HK$13.50, raising $1.5 billion, and valuing the company at $8.8 billion. The story notes that this was the second-largest Internet IPO ever; only Google’s IPO was larger.
Yahoo shares rose 26% over the last eight sessions, including a gain of $2.29 on Friday, to $33.63; through Friday, the stock had gained 47% since early July. Monday, though, the stock is off $1.63, or 4.9%, at $32.