Yahoo! Inc. YHOO 0.13%’s core business may not be improving anytime soon, but the stock could see some major short-term upside upon the completion of a buyout deal. According to Cantor Fitzgerald analyst Youssef Squali, management commentary suggesting a deal is imminent was the most important takeaway from the company’s Q2 earnings report.
“We’re maintaining a BUY rating with a $49 PT based on our expectation for a successful outcome to the company’s current sale process, which appears to be coming to a close, and supported by our SOP valuation,” Squali explained.
Yahoo reported revenue on the quarter (ex-TAC) of $841.2 million, roughly in line with consensus expectations, but down 19 percent year-over-year.
Adjusted EBITDA of $172.4 million came in well above consensus estimates of $148 million. Squali credits aggressive cost-cutting for the beat.
Yahoo’s so-called MaVeNS (mobie, video, native and social) delivered a disappointing 4 percent year-over-year growth on the quarter, once again reflecting that Yahoo’s core business continues to struggle to gain traction. Video was the weakest segment.
Squali believes…
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