Marissa Mayer has been at Yahoo! Inc. (NASDAQ:YHOO) for more than a year now, and the general opinion suggests that she's doing a good job at the company. Since she took the top job at the web portal operator the price of the stock has increased by more than doubled since she took the job.
A new report from UBS takes a look at Yahoo! Inc. (NASDAQ:YHOO) and ups its price target on the firm to $37. The main reason for the increase in the price target on the stock does not really come from Marissa Mayer's actions. It's coming from the incredible performance of the Chinese subsidiary of Yahoo! Inc. (NASDAQ:YHOO) AliBaba.
According to the report Alibaba.com Limited (HKG:1688) is performing incredibly well at the moment, and that performance has justified an increase in earnings and revenue targets for the company. UBS raised the targets on the company to $11.8b from $11.1b for revenue and 2014 operating income estimate to $5.2b from $3.9b.
AliBaba is probably headed for an IPO in the coming months and Yahoo! Inc. (NASDAQ:YHOO) will see a huge cash windfall from the offering. The report asserts that AliBaba will seek to go public at a valuation of around $100 billion. Yahoo will be forced to sell half of its stake in the IPO and the analysts assume the company will be fully taxed on the deal.
In a previous report the analysts figured that Yahoo! Inc. (NASDAQ:YHOO) would only be able to sell AliBaba to the public for around $70 billion, but the better than expected performance at the company is driving the likely price of the offering upward. The deal will result in a huge windfall for Yahoo, but that only matters if the company can figure out what to do with the money.
Marissa Mayer performance at Yahoo
Marissa Mayer saved Yahoo! Inc. (NASDAQ:YHOO) from an ignominious disappearance last year. Her management of the company has resulted in a stabilization of core business and the belief among investors that the company is finally going somewhere after many poor years.
It is unclear where the company is going however, and core business is not growing enough to justify the price of the company. Marissa Mayer has used the right words, including Video and Mobile, but she's shown off little but ambition. Alibaba.com Limited (HKG:1688) is really driving the price of the company right now.