Citigroup analyst Mark May is getting positive on Yahoo! Inc. (NASDAQ:YHOO). In a new report, May raised his price target on shares in the company and was optimistic about the company’s business from top to bottom. Like many recent analyst reports, much of the research concentrates on the increasing value of AliBaba. May is also very positive on Yahoo! Inc. (NASDAQ:YHOO)’s core business.

Yahoo China

Core Yahoo! Inc. (NASDAQ:YHOO) business is a difficult beast to measure. The firm’s Web Portal base has been declining massively for years, and the new strategy from CEO Marissa Mayer is less than concrete at the moment. Nevertheless, it is interesting to see an analyst take on the challenge presented in valuing the company’s core.

Core business at Yahoo!

According to Mr. May, Yahoo! Inc. (NASDAQ:YHOO) saw a massive surge in search growth in August. The search race is one that Yahoo! Inc. (NASDAQ:YHOO) lost to Google years ago, and the company seemed to have given up on it as a source of real revenue. The Citi report projects that year on year paid clicks rose by 22 percent in the month of August.

The rise in the value of the Yahoo! Inc. (NASDAQ:YHOO) search business is surprising, but it is not as useful for investors as the company’s increased traction on mobile platforms. Mobile is a key part of the company’s strategy going forward, and May says there are already encouraging signs that management’s strategy in this area is working.

In other core business news, May says that user trends are looking good. This means the amount of new users on the platform and the amount of time that users spend with Yahoo! Inc. (NASDAQ:YHOO) services. The general stats may suggest that Yahoo is doing better, but nobody is exactly sure about where the company is headed.

Yahoo! strategy

Yahoo! Inc. (NASDAQ:YHOO) management probably isn’t planning on competing for the search business with all of its might. The company will be left with a huge pile of cash after the AliBaba sale, and it will have to do something with it.

CEO Marissa Mayer has spent her time in the last year using the right words to define a vague strategy, and has made some good-looking acquisitions. That means little if she cannot build a new business for Yahoo! Inc. (NASDAQ:YHOO). The company has been saved—now what?

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