Bullish Algorithmic Forecast For Yahoo Around The Alibaba IPO

Even though Yahoo (YHOO) Chief Executive Officer Marissa Mayer slipped up and “overslept,” making her late to a meeting with advertisers last week, YHOO as an investment is still currently a buy. This is driven by the company’s proactive approach to revitalize itself as well as the upcoming Alibaba.com (BABA) IPO, which currently outweighs the risks associated with the stock. Our advanced algorithmic prediction system also has a bullish forecast for YHOO shares in the 1-month and 3-month time horizons.


Over the past year the stock returned approximately 32%, outperforming the broader market over the same time frame. While this rise during the last year has made the stock more expensive compared to its peers, the company is able to justify this evaluation and has potential to expand value. The company has a strong gross profit margin of 83.44%, an increase from the same quarter a year ago and an above the industry average net profit margin at 27.5%. The debt-to-equity ratio is very low at 0.09. In addition the company supports a quick ratio of 3.20 exhibiting Yahoo’s propensity to cover short-term cash needs. However, it is also important to recognize financials where Yahoo needs to improve performance. For instance, earnings per share have decreased 17.1% in the most recent quarter and the company has suffered a declining trend of earnings per share this past year. On the other hand, the market expects Yahoo to be able to reverse this trend, with an improvement of earnings of $1.64 versus $1.26. As a side note, the company is very popular and considered one of the most loved companies in 2013. Coming in at number two behind Walt Disney Company (DIS), scoring 74.3 on theEmotional Linking Index scale. Granted investors strictly interested in financials will not find this useful, however this information by APCO Worldwide does give us some additional perspective of the public’s overall outlook on Yahoo beyond our own singular viewpoint.

At the annual shareholder meeting, Marissa Mayer focused on the company’s progress in developing native advertising and video products, in particular Yahoo seeks to enhance advertising utilizing Tumblr, a social media tool, which was purchased for $1.1 billion. One of these initiatives on the blogging website include marketing products such as sponsored posts. So far some advertisers seem to be pleased with the progress Yahoo has made. According to The Washington Post, Kellogg Co. (K) has increased spending with Yahoo in 2014 compared with 2013. Vice president of global media and digital strategy at Kellogg, Jon Suarez-Davis even gave a personal endorsement to the paper stating, “I think Marissa has done a good job of listening… She’s put in a great team. We will continue to invest in Yahoo.”

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