Yahoo! Inc. (NASDAQ:YHOO) is scheduled to deliver its earnings results for the third quarter today, October 21. Analysts at Cantor Fitzgerald Equity Research expected the company to deliver muted financial performance for the quarter with “operating results virtually in line with expectations/guidance.”

Yahoo! Inc. Earnings: Analysts Expect Muted 3Q Results

Earnings estimate for Yahoo!

Cantor Fitzgerald analyst Youssef Squali and his colleagues estimated that Yahoo! Inc. (NASDAQ:YHOO) will be able to achieve $259.7 million in EBITDA and $1,054.2 million in net revenue for the third quarter. Their expectations were in line with the consensus estimate of $249.5 million in EBITDA and $1,047.5 million in revenue based on data compiled by Fact Set.

On GAAP basis, Yahoo! Inc. (NASDAQ:YHOO) was expected to deliver $0.22 in earnings per share compared with the consensus estimate of $0.23 in earnings per share.

Investors to focus on Yahoo’s display growth

In a note to investors, Squali and his fellow analysts emphasized that investors will focus their attention on the display growth of Yahoo! Inc. (NASDAQ:YHOO). The analysts noted that the company is still a share loser when it comes to display and search.

Squali and his team estimated that its display revenue declined 6.2% (ex-TAC) to $395.3 million year-over-year. On the other hand, its search revenue was expected to increase 5.7% (ex-TAC) to $450.2 million year-over-year. “These rates pale in comparison to mid-teens industry growth, and display in particular has been challenged,” according to

Meaningful monetization and revenue growth remained elusive

Squali and his fellow analysts observed significant improvements in the culture, products and user engagement at Yahoo! Inc. (NASDAQ:YHOO). The analysts said the company’s first glimpse of growth happened in the first quarter of this year, but they noted a “meaningful pick-up of monetization and revenue growth remained elusive.”

The analysts estimated that the overall revenue of Yahoo! Inc. (NASDAQ:YHOO) for the fiscal 2015 would decline by 0.9% year-over-year.

They emphasized that the management of the company needs to prove that it can grow at rate closer to industry levels for its stock to work on a longer term.

The analysts said Yahoo Japan Corporation (TYO:4589) and Alibaba Group Holding Ltd (NYSE:BABA) still supports the sum-of-the-parts valuation of Yahoo! Inc (NASDAQ:YHOO). Yahoo Japan and Alibaba contributes $33 per share to its valuation (including the ~6.4 for BABA IPO net proceeds). Its Asian assets plus all cash/short-term investments contribute $37 per share.

Squali and his team maintained their Buy rating for Yahoo! Inc. (NASDAQ:YHOO) with a price target of $43 per share.