TECH STOCKS: Yahoo 'materially Undervalued,' Says UBS

By Dow Jones Business News, 
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By Benjamin Pimentel, MarketWatch

SAN FRANCISCO (MarketWatch) -- Shares of Yahoo Inc. jumped Tuesday after a UBS analyst told clients that the Web portal's stock was "materially undervalued," citing the company's Alibaba stake and gains in its core business.

Yahoo (YHOO) shares were up 2.6% at $34.87. UBS analyst Eric Sheridan, who has a buy rating on Yahoo, told clients in a note that "the market is materially undervaluing the sum of the parts in Yahoo shares."

Sheridan cited Alibaba, the Chinese company in which Yahoo owns a 24% stake and which is expected to go public soon. " We believe Alibaba should continue to deliver outsized revenue growth on the back of strong secular growth in China e- commerce," he wrote. He also said Yahoo's core business, which performed better than expected in the last quarter, " warrants a multiple more In-line with peers."

Meanwhile, Microsoft Corp. slipped after the Department of Homeland Security warned users to stay away from the tech giant's popular Internet Explorer browser because of a serious security flaw.

Microsoft ( MSFT ) shares were down nearly 1% at $40.60 in morning trades. On Monday, the federal agency said an Internet Explorer flaw "could lead to the complete compromise of an affected system," and urged users to switch to other browsers until Microsoft fixes the problem.

The Explorer glitch erupted after Microsoft received fairly upbeat reviews after the tech giant posted better-than- expected earnings and new Chief Executive Satya Nadella unveiled a "cloud-first, mobile-first" strategy.

IDC analyst Crawford Del Prete said he did not expect the Explorer problem to have a long-term impact on the company.

"While its an important part of the Microsoft story, browsers are not the point of leverage that they once were," he told MarketWatch. "Microsoft will need to address this quickly, and once they do, I don't expect significant long term fallout."

Despite Microsoft's decline, technology stocks were mostly higher as the Nasdaq Composite Index (RIXF) gained 0.4% to 4,092. The Morgan Stanley High Tech 35 Index (MSH) and the Philadelphia Semiconductor Index (SOX) were each up a fraction.

Shares of Hewlett-Packard ( HPQ ) were up more than 2% after Pacific Crest raised its rating to outperform from sector perform.

Twitter (TWTR) shares rose 1% after a shaky start ahead of the social network's first-quarter report due after the closing bell.

Shares of eBay ( EBAY ) were trading flat, last down a fraction, as the e-commerce company also geared up for its report.

Shares of Apple( AAPL ) also slipped a fraction, while Netflix Inc. ( NFLX ) gained 1%.

Other stories from MarketWatch:

Twitter, eBay roll out results to skittish investors

Twitter earnings: User growth again in focus

Still use Internet Explorer? Don't

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  (END) Dow Jones Newswires
  08-05-141826ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


This article appears in: News Headlines

Referenced Stocks: AAPL , EBAY , HPQ , MSFT , NFLX

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