Q4 Preview: Buybacks Drive Recent Yahoo! (YHOO) Gains, Buy Investors Will Need More

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Yahoo! (Nasdaq: YHOO) shares are trading lower Monday afternoon heading into the Company's fourth-quarter 2012 report, expected out after markets close today.

The Street consensus currently sees Yahoo! reporting EPS of 28 cents on revs of $1.21 billion. The numbers compare with EPS of 25 cents and revs of $1.17 billion in the same period last year.

Shares of Yahoo! have been on the rise since the company's third-quarter report issued last October. Since then, the stock is up about 27 percent, recently hitting a new 52-week high at $20.52. Much of the upside on the last half-year has been attributed to CEO Marissa Mayer. Having worked at Google (Nasdaq: GOOG) for a number of years and spearheading several key projects, investors are speculating that some of the best may yet come as transformations take hold at the one-time Internet search leader.

Goldman Sachs is looking for EPS of $0.24 and many of the results to come in-line with consensus views. The firm says some of the focus will be on financial guidance for 2013 along with comments on Yahoo!'s plan to drive growth while controlling costs, buyback updates, the Mexican court ruling, and search RPS. The firm noted that, "Page views in October and November 2012 declined by 15.4% yoy versus -12.5% in 3Q12, according to comScore. Engagement (average monthly minutes per user) was 117 in Q4 vs 123 in Q3. Declining share across the company's core properties, email, finance, sports, entertainment, etc will continue to pressure revenue growth, even as we continue to see monetization improvement in the search business."

Notably, Goldman notes that some of the recent appreciation may be due to aggressive repurchases by the company. Yahoo! still has about 64 percent of buybacks remaining which Goldman thinks will be a major catalyst moving forward.

Cantor Fitzgerald sees EPS of $0.21 and revs of $1.22 billion. Cantor sees strong areas as Display and Search, while materially lagging the industry in overall growth rates. Search, ex-TAC will likely grow 10.3 [prcent to $414 million while Display will see just 0.5 percent of upside to $550.5 million.

Investor focus points from Cantor: "We expect CEO Mayer to provide a progress report on investments/traction in Mobile, on programmatic ad selling, on Search (possible renewal of the RPS guarantees with Microsoft) and on the stock buyback. Additionally, with CFO Goldman having had a quarter to settle in, we may hear a discussion about potential restructuring plans."

According to Streetinsider.com's Ratings Insider , about seven analysts have a Buy rating on Yahoo!, 23 have a Neutral rating, and three maintain a Sell. The average price target is $18.70, ranging from $13 to $26.

Yahoo! is down about 0.4 percent, just off of session lows.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings , Stocks

Referenced Stocks: GOOG , YHOO

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