Analyst Raises Yahoo Shares On Alibaba Deal, Warns Display Ad Market Remains 'Secularly Challenged'

  • May 21, 2012

Pivotal Research Group raised its target price of Yahoo‘s stock to $19 per share following an announcement by Yahoo Sunday night that it has agreed to sell its stake in Alibaba Group. Paired with the appointment of a “strong new board” and an interim CEO, Pivotal analyst Brian Wieser said “positive catalysts are now emerging for the company.” According to the announcement, Alibaba will repurchase 20% of its shares (half of Yahoo’s stake) back from Yahoo for a minimum of $7.1 billion in cash and stock. As part of his rationale for upgrading Yahoo’s target price, Wieser added: “Critically, we continue to believe that the core display advertising business is secularly challenged, and is generally unlikely to grow materially on an organic basis going forward, largely owing to marketers’ online advertising efforts which continue to focus away from premium display inventory.”

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