Google’s solid revenue results are providing encouragement for Yahoo’s earnings. The display ad market is bouncing back, and Yahoo should benefit.
Citi analyst Mark Mahaney has a $22 price target, and cites these 5 reasons in a note:
- Clear Display Ad Recovery with YHOO Participation
- Sig. Op Margin Expansion – 200 bps Y/Y expansion guidance for Q2, and full year Cash Costs guide of 1%-3% growth
- Overall Usage/Search Share stabilisation
- Good Capital Allocation incl. recent $3B share buyback authorization
- Asia Assets Catalyst – probably not ’til 2011.
The key consensus estimates:
- Net revenue: $1.16 billion
- Operating income: $178 million
- GAAP EPS: $0.14
- Expect to hear questions about Yahoo’s acquisition of Associated Content, the big ad campaign for Yahoo, the fact that time spent on Yahoo keeps slipping, and questions about the Microsoft-Yahoo deal, as well as the usual questions about growth in display ads and content.
Here’s a cheat sheet from Citi analyst Mark Mahaney. Click here, or on image for a larger version.
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