Couple of analyst comments on Yahoo’s Q4 from my flooded inbox:
RBC Capital Markets (Jordan Rohan)
RBC Capital Markets analyst Jordan Rohan increased price target to $31 from $30 and maintained his Outperform rating on Yahoo! Inc. (NASDAQ: YHOO) this morning. According to Rohan, 4Q06 results were at the high end of the guided range, driven by display advertising. Midpoint of FY07 guidance fell shy of consensus, but the company pointed to strength in pacings thus far in 2007. Assuming a contribution from Panama in the second half of 2007, upside to estimates is possible in the back half of the year. YHOO shares are likely to rally near term in anticipation of better search monetization. Looking out 12 months, Rohan believes shares of YHOO will trade modestly higher than they do today.
Citigroup Investment Research (Mark Mahaney)
- YHOO reported a Beat & Lower Q — $1.23B in rev/$0.16 EPS vs. our/Street ests of $1.20B/$1.22B & $0.13. YHOO’s first EPS Beat in over a year! Display & Search exhibited less growth deceleration than expected. ’07 outlook was conservatively placed below Street — midpoint rev/EBITDA of $5.2B/$2.1B vs. $5.5B/$2.2B Street. KEY positive was the 02/05 Panama launch date!
- Fundamentals were mixed. Organic Y/Y growth decelerated to 14% from 22% Y/Y in Sep, but EBITDA margin rose to a record high 44%.
- Shading down estimates — ’07 EBITDA goes from $2.2B to $2.1B; EPS from $0.55 to $0.52. PT remains $35 — 15X ’08E EBITDA.
- Stock should continue to work because 1) the bar has been reasonably lowered; 2) full Panama catalyst is imminent (Q2:07 should begin search reacceleration); 3) display ad growth remains robust; 4) Risk-reward appears good with 14% dside to 10X trough EV/EBITDA valuation ($23) and 30% upside to PT.