) will report earnings after the bell on Tuesday, April 16 with a
scheduled for 5:00 pm EST
The company, once seen as heading for irrelevance much like
), has seen a resurgence since CEO Marissa Mayer took the reins
of the company.
Here's what to expect when the company reports Tuesday after
Yahoo is expected to report EPS of $0.24 and revenue of $1.1
billion. That's 33 percent and nine percent lower than last
The Bull Case
JP Morgan analyst Doug Anmuth believed that Yahoo's Alibaba
stake is currently worth more than $14 billion and growing
rapidly. This, after Yahoo agreed to sell 40 percent of its stake
in the company in May. The company's Asian assets are a
little-known, yet lucrative contributor to its bottom line.
) still reigns supreme in the world of search, but Yahoo and
partner Microsoft are gaining ground. Search revenue is likely to
show a seven percent increase in the first quarter.
The Bear Case
While Yahoo has gained ground on Google, display ad revenue
has suffered over the past few years. Mayer unveiled a redesigned
homepage that received mixed user reviews along with a revamped
Yahoo Mail experience. Despite the changes, analysts believe that
it's too early to tell if the redesign will have an impact.
With display ads accounting for 40 percent of Yahoo's revenue,
expect this metric to be in the headline numbers. Investors want
to see this number higher than the $520 million reported last
quarter, but analysts are expecting a decline of seven percent.
In total, sales and profit are only expected to show a two
To a technical analyst, the Yahoo chart looks like something
that belongs in a museum. Since basing throughout October, the
stock has been on an upward trajectory forming a tight ascending
channel with a healthy leg up, followed by a smaller unwinding
only to make a higher high. This is classic Dow Theory chart
action that allows the stock to continue higher without reaching
drastically oversold conditions. Look no further than the current
RSI of 60 to prove the point.
However, investors should note that since February, a wedge
pattern has started to form where the stock is forming modestly
lower highs and higher lows. If this action continues, the stock
could see a technical correction taking it back to its 200 DMA,
currently about eight percent lower.
Much of the company's 55 percent gain stems from the
excitement of Marissa Mayer-not the improving fundamentals. It's
fast becoming a "show me the money stock" and that sets it up for
a severe correction should the company surprise with worse than
Disclosure: At the time of this writing, Tim Parker had no
position in the above mentioned equities.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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