A report issued this morning from analysts at Goldman Sachs Group, Inc. (NYSE:GS) includes a big upgrade for shares of Yahoo! Inc. (NASDAQ:YHOO). They are adding the stock to their conviction list and increasing their price target from $22 to $24, so that it will reflect the net impact of their latest revised estimates and fluctuations in the value of Yahoo!’s balance sheet assets.
Goldman Sachs Group, Inc. (NYSE:GS) analysts said that Yahoo!’s most recent filings indicating its capital allocation actions are driving their revaluation of the company’s shares. Yahoo! Inc. (NASDAQ:YHOO)! has repurchased more than 54 million shares this year so far for a total of $858 million. Of that total, $212 million was in the company’s fourth quarter, which ends in November.
Analysts Raise Estimate Expectations
Analysts at the investment firm are also raising their estimates of expectations for the search engine’s core business, amid signs of improvement and expectations for cost reductions in the near future. However, Goldman Sachs Group, Inc. (NYSE:GS) does remain below consensus because of what its analysts cite as “uncertainty of the turnaround and continued tech and investment spending.” The firm’s expected revenue and adjusted earnings before interest, tax, depreciation and amortization for Yahoo! Inc. (NASDAQ:YHOO) in 2013 is up by 3 percent and 12 percent respectively. They are also increasing their 2014 estimates for 7 percent and 28 percent respectively.
Goldman Sachs Group, Inc. (NYSE:GS) said the main risks for investing in Yahoo! Inc. (NASDAQ:YHOO) shares right now are the ability of the search engine giant to monetize the rest of its balance sheet assets, its ability to transition to mobile search, and its relationship with Microsoft.
In late morning trades, shares of Yahoo! Inc. (NASDAQ:YHOO) were fairly flat on the the stock's opening rate of $18.88 per share.