Yahoo! Inc. (NASDAQ:YHOO) management continues to execute and focus on creating more value for shareholders, according to analysts at UBS. They have increased their price target for the company from $52 to $58 per share and reiterated their Buy rating on Yahoo stock.
Yahoo’s newest acquisition
The search giant announced this week that it has agreed to acquire programmatic video ad platform BrightRoll at a price of $640 million. The acquisition is a smart one because comScore data indicates that BrightRoll brought the highest number of video ads to desktop users in the U.S. out of all advertising platforms.
In a report dated Nov. 11, 2014, analysts Eric Sheridan, Vishal Patel and Timothy Chiodo said this acquisition fits in with their belief that the company will keep focusing on growth in areas like digital advertising, online video and programmatic advertising.
The UBS team said that last month, BrightRoll saw significant growth. The company went from 2 billion ad requests each month in September 2011 to 2 billion per day in September 2014. The company also expects to see more than $100 million in net revenues and be EBITDA positive. The acquisition is expected to close in the first quarter of 2015.
Yahoo continues share buybacks
Yahoo also said earlier this month that it has continued to buy back shares since the last quarter ended. In September, the company said it had bought back 23.5 million shares, including 15 million during the third quarter and 8.5 million shares in the fourth quarter.
Yahoo also repurchased an additional 13 million shares for $544 million through Nov. 7 and plans another ASR for $1 billion, which is expected to settle in the fourth quarter, including 15 million shares received up front. The UBS team said these numbers mean Yahoo should buy back at least 36.5 million shares in the fourth quarter, compared to their previous estimate of 17 million. The analysts “applaud” the company’s continued focus on returning capital to shareholders.
Catalysts for Yahoo continue
The analyst also said they continue seeing a number of catalysts for Yahoo stock play out. Last month they explained a number of paths they saw to creating value. Those paths included turning around Yahoo’s core business, seeing a possible tax efficient exit of its Asian assets and returning more capital to shareholders through dividends and / or share repurchases.
They think Yahoo will continue to outperform as management focuses on these areas.