UPDATE 1-Analysts bullish on Yahoo after Q3 tops expectations
Oct 21 (Reuters) - At least one brokerage upgraded Yahoo Inc YHOO.O and seven others raised their price targets on the stock Wednesday, a day after the Internet company posted third-quarter results that beat Wall Street estimates, helped by improvement in advertising spending and cost cuts.
Shares of Yahoo, the top U.S. seller of online display ads, touched a new 52-week high of $18.02 in early-morning trade.
S&P Equity Research raised Yahoo to "strong buy" from "hold", and said potential positive catalysts for the company include further product improvements and asset sales.
A big chunk of Yahoo's third-quarter net profit, that more than tripled year-over-year, came from the sale of its stake in Chinese Web site alibaba.com. [ID:nN20456665]
"Yahoo will participate in advertising recovery that is already showing real traction on the Internet," Citigroup analyst Mark Mahaney said in a note to clients.
Yahoo had reported a 2 percent sequential increase in quarterly U.S. display ad sales.
Stifel Nicolaus analyst George Askew said Yahoo's new leadership, which includes Chief Executive Carol Bartz and Finance Chief Tim Morse, and its earnings operating leverage as it closes non-core businesses are among the main drivers for the company.
Collins Stewart analyst Sandeep Aggarwal said focus on behavioural targeting, operational efficiencies and a likely upside from Microsoft Corp (MSFT.O: Quotazione) search deal will help Yahoo in growth acceleration and margin expansion.
Yahoo has undergone significant restructuring since Bartz took over in January and has pulled the plug on underperforming properties.
"In our view, as Yahoo moves from a 'silo' driven culture to a operationally nimble and efficient culture, it can expand its margins," Aggarwal said in a note.
Shares of Yahoo, the No.2 search engine in the United States, were up 4 percent at $17.85 Wednesday on Nasdaq.
Listed below are the price target changes and ratings by the different brokerages on Yahoo shares:
Brokerage Price Target ($) Rating
Citigroup 22 21 Buy
Collins Stewart 22 21 Buy
Credit Suisse 18 14 Neutral
Stifel Nicolaus 23 19 Buy
RBC Capital Markets 22 19 Outperform
S&P Equity Research 24 18 Strong buy
Thomas Weisel Partners 18 16 Market weight
UBS 18 16 Neutral (Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Pradeep Kurup)
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