Analysts Debate: Is Yahoo! Inc. (YHOO) a Top Stock?

However, I’d like to call attention to two things my colleagues haven’t mentioned: its remaining Alibaba stake and its part-ownership of Yahoo! Japan, which trades on the Tokyo exchange at a roughly equivalent market cap to its American progenitor. These two positions represent a significant chunk of Yahoo!’s present value and are probably responsible for the lion’s share of its valuation growth over the past year.

Some analysts, particularly over at Forbes, have made the case that these stakes should grant Yahoo! a somewhat higher per-share price than current levels, because the company’s core business is significantly undervalued when accounting for Alibaba’s highly anticipated IPO and Yahoo! Japan’s swelling market cap. I examined these claims when writing my own take on how to appropriately value Yahoo! Inc. (NASDAQ:YHOO) today, and you can read more by clicking here.

When breaking down the pros and cons of Yahoo!’s present and future opportunities, I find it hard to agree with estimates that peg Yahoo! to much higher prices. I actually believe that Yahoo! is priced at appropriate levels today for a company with no real domestic growth prospects and a stated intention to reduce its stake in valuable foreign holdings. Based on that, I’d expect nothing more than performance in line with the indexes going forward, which isn’t enough to justify putting a CAPScall on the stock today in either direction.

The final call
There you have it, our first unanimous “meh” rating of a stock. We all agree that there’s some value and potential for Yahoo! but that it’s an uphill climb for Marissa Mayer and company. We won’t be making an outperform or underperform call today, but you can check out the 31 calls we have made in the past year and see how those calls have outperformed the market by 547 points so far.

The article Analysts Debate: Is Yahoo! a Top Stock? originally appeared on Fool.com.

Fool contributors Alex Planes and Sean Williams have no position in any stocks mentioned. Fool contributor Travis Hoium manages an account that owns shares of Microsoft. The Motley Fool recommends Facebook and Google and owns shares of Facebook, Google, and Microsoft.

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