"Now that heads are cooler, we're revisiting our investment thesis on Yahoo!, addressing key issues we heard from investors and showing that while Yahoo! is not out of the woods yet, positive momentum will start building again around the story and the stock," say Jefferies & Co. analysts in a research note early Thursday morning.
Over time, Jefferies analysts have looked
increasingly favorably on the search and advertising deal Yahoo! Inc. (NASDAQ:YHOO) struck with Microsoft Corp. (NASDAQ:MSFT), and they maintain the firm's buy rating.
"We remain positive on Yahoo! believing that 1) the search deal will prove accretive to the P&L as it cuts opex/capex and potentially helps drivesearch revenues, 2) it liberates management to focus on Display, a big opportunity that's Yahoo!'s to lose and 3) the valuation is attractive."
Investors so far have not come around. Yahoo!'s stock
dropped more than 12% on July 29, the day the deal was announced, and it has
yet to come back.
- Mary Kathleen Flynn
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