- Jefferies notes they are maintaining Buy rating on Yahoo! (NASDAQ:YHOO) given its attractive valuation ahead of what they believe will be a soft quarter. While they expect the stock to continue to languish short-term, the firm would expect it to finally start working in late 4Q/early 1Q07.
Firm is lowering their Q306 estimates following management's comments that slowing growth in the autos and finance verticals will cause 3Q results to come in at the low-end of guidance. They believe this is most likely Yahoo!-specific, and not a prelude to a wider economic slowdown, particularly that autos benefited from aggressive employee discounts last year, which were not offered this year. Yahoo!'s branded advertising, which the firm has been pegging at Y/Y growth of 35% in 3Q seems to be the most impacted and likely to come in closer to 30%.
Based on their proprietary tracking of keyword pricing, they believe that (CPC) search pricing was flat to slightly down sequentially. Growth should therefore be coming from volume and monetization.
Firm expects management to tighten its guidance range for FY06 towards the low-end or possibly lower it further. The launch of "Panama" and the seasonally strong 4Q should serve as catalysts medium-term. Investors with a horizon of at least 6-12 months should build positions ahead of these events.
Tgt goes to $39 from $43.
Notablecalls: Not actionable but good to know category.
Firm is lowering their Q306 estimates following management's comments that slowing growth in the autos and finance verticals will cause 3Q results to come in at the low-end of guidance. They believe this is most likely Yahoo!-specific, and not a prelude to a wider economic slowdown, particularly that autos benefited from aggressive employee discounts last year, which were not offered this year. Yahoo!'s branded advertising, which the firm has been pegging at Y/Y growth of 35% in 3Q seems to be the most impacted and likely to come in closer to 30%.
Based on their proprietary tracking of keyword pricing, they believe that (CPC) search pricing was flat to slightly down sequentially. Growth should therefore be coming from volume and monetization.
Firm expects management to tighten its guidance range for FY06 towards the low-end or possibly lower it further. The launch of "Panama" and the seasonally strong 4Q should serve as catalysts medium-term. Investors with a horizon of at least 6-12 months should build positions ahead of these events.
Tgt goes to $39 from $43.
Notablecalls: Not actionable but good to know category.
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