According to Bob Peck, the underappreciated assets of the company can raise the total valuation of Yahoo
The Yahoo Inc. saga is getting ridiculous day by day from any point of view. Since the end of last month, the company is extending its deadline for the official submission of the bids for its core web and advertising business along with Asian assets. It announced in the beginning of the week to extend the deadline to April 18 once again. The latest suitors who are determined to propose an official bid are Britain’s Daily Mail and Verizon Communications.
When the matter initially started, Yahoo decided to spin off its core internet business, which was opposed by the activist investors and shareholders. The company wanted to spin off it into a separate entity but now the board of directors is approaching and inviting bidders to buy out its core business. The professionals value the assets of the search engine giant in between the range of $6 billion and $8 billion. A number of underappreciated assets can help Yahoo to reach a total valuation of $10 billion.
Buy rating on the stock has been maintained by a reputable analyst at SunTrust Robinson Humphrey, Bob Peck, while giving it a price target of $40 to $44. In a recent coverage of Yahoo, Mr. Peck underlined three assets in his opinion that can provide a lift to Yahoo’s valuation above $6 billion to $8 billion. The first underappreciated asset is the royalties which it will receive from the spinoff of its Yahoo Japan. Analysts believe that the revenue stream of Yahoo Japan was very much profitable which is also accountable for the 30% of Yahoo’s total advertising revenue so far.
Bob Peck also highlighted the revaluation of the company’s intellectual property as Yahoo still has nearly six thousand patents under its name that can easily raise the value up to $1 billion to $3 billion as per the estimates of analysts. Majority of these patents are available publicly hence, they can prove to be valuable assets for Yahoo considering the core business. On top of that, Yahoo can also include the real estate holdings under its business which would be close to $1 billion for an approximately 1 million square feet in real estate and buildings.
Yahoo has a lot on its plates now and it is not only concerned about selling its core internet business but the Asian assets are a bit of concern as well. Verizon is looking for a deal in which it will include the stakes in Yahoo Japan to improve its chances. On the other hand, Daily Mail wants a partner in conjunction that would come forward with the British newspaper to propose a deal.
Without the underappreciated assets, Yahoo is only worth at $6 to $8 billion but this will come handy for the board of directors that would take it to a mark that it wants.
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