Analysts Weigh In Before Yahoo’s Q4 Report

Yahoo! Inc (NASDAQ:YHOO) is poised to release fourth quarter earnings tomorrow, January 27th after market close.

Estimates agree that Yahoo’s earnings per share will drop from $0.46 to $0.29 on a non-GAAP diluted basis; a 37% year-over-year decrease. Analysts estimate that revenue will drop 1% to $1.2 billion. BrightRoll, an automated video advertiser which was acquired by Yahoo in December, is expected to contribute to quarterly revenue.

Aside from the numbers in the earnings report, analysts are looking forward to hearing how Yahoo CEO Marissa Mayer will handle the transfer of Alibaba (NYSE:BABA) shares. Yahoo still owns 15% of Alibaba, or about 384 million shares. Investors are waiting for Mayer to announce how she will ensure that Yahoo shareholders receive the optimal value from Alibaba with minimum tax burden. Investors will also be looking for just how many shares of Alibaba will be sold by Yahoo, if not all of them.

On January 26th, analyst Mark May of Citigroup reiterated a Buy rating on YHOO with a $63 price target. May noted that once Yahoo discloses its plan for handling its Alibaba shares, the focus will return to “core Yahoo!” He continues, “Despite negative press coverage and consensus forecasts that call for only 2% net revenue growth (ex-FX) this year, we believe core Yahoo! is showing green shoots as fast-growing mobile revenue becomes increasingly material to overall results.” The analyst sees this as a “path to 6-9%+ net ad revenue growth ex-FX in CY15.”

Mark May has rated Yahoo 15 times since February 2009, earning a 73% success rate recommending the stock and a +19.7% average return per Yahoo recommendation. Overall, May has a 63% success rate recommending stocks with a +12.7% average return per recommendation.



Separately on January 26, analyst Victor Anthony of Topeka Capital Markets maintained a Buy rating on Yahoo with a price target of $60. Anthony expects Q4 earnings to be “in-line… with upside risks to estimates due to share gains in search as a result of the Firefox win, and greater mobile traction.” Anthony estimates that search revenue will grow 3% year-over-year, “a deceleration from 5.5% in 3Q.” Additionally, the analyst is expecting display revenue growth -4% YoY (-6% YoY in 3Q) on a 20% growth in ads sold and a 23% decline in the pricing of ads.” Lastly, Anthony also expects Tumblr to “generate $100M in revenues in 2015 and will turn EBITDA positive. However, with the combination of video ads, which will be accelerated by the Brightroll acquisition, native, and search, we expect revenues to surpass guidance by a meaningful margin and again grow strongly in 2016.”

Victor Anthony has rated Yahoo 11 times since April 2013, earning a 91% success rate recommending the stock and a +26.5% average return per Yahoo recommendation. Overall, Anthony has a 62% success rate recommending stocks with a +16.3% average return per recommendation.



On average, the top analyst consensus for Yahoo on TipRanks is Moderate Buy.