(Adds details, analyst's comment; updates shares)
By Saqib Iqbal Ahmed
April 16 Yahoo Inc's shares rose as
much as 9 percent in heavy trading on Wednesday, a day after
Chinese internet company Alibaba Group Holding Ltd IPO-ALIB.N,
in which it holds a 24 percent stake, reported a surge in
At least nine brokerages raised their price targets on
Yahoo's shares ahead of Alibaba's IPO filing, expected next
The share, up 5.5 percent at $36.10 in early trading, was
the most heavily traded stock on the Nasdaq.
"We continue to recommend aggressive purchase of (Yahoo's)
shares ahead of the Alibaba IPO," Topeka Capital Markets analyst
Victor Anthony said in a note.
Alibaba, which reported a 66 percent rise in fourth-quarter
revenue, is expected to file prospectus for the share sale as
early as Monday, sources said.
The IPO is set to be the largest in the United States since
Facebook Inc's 2012 market debut and it is the most
awaited IPO in what's expected to be a record year for U.S. tech
debuts after Twitter Inc's successful IPO in 2013.
Alibaba's impressive performance overshadowed Yahoo's anemic
revenue growth in the first quarter.
Analysts, however, were positive on growth in Yahoo's core
display and search advertisement revenue as the company invests
in mobile, social, video and native advertisement products.
Yahoo's display ad revenue grew for the first time in more
than a year, while search revenue rose for the ninth straight
Speculation about the valuation of Alibaba has reached a
fever pitch, with some brokerages pegging it as high as $190
billion. This sets Yahoo up for a huge windfall when it
eventually sells its Alibaba stake.
"The potential prospects of an Alibaba IPO are the chief
motivation for our buy recommendation, but our positive view on
shares is also supported by our increasing confidence in the
core YHOO operation," CRT Capital analyst Neil Doshi said.
Yahoo could benefit if it is able to liquidate its Alibaba
stake in a tax-efficient manner, Wells Fargo analyst Peter
Wells Fargo raised its rating on Yahoo's stock to
"outperform" from "market perform."
Yahoo's shares have jumped about 50 percent in the past year
as CEO Marissa Mayer pushes ahead with her turnaround plan.
(Additional reporting by Soham Chatterjee; Editing by Saumyadeb
Chakrabarty and Kirti Pandey)