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Goldman Sachs: Sell Yahoo

December 14 2011 Tweet Email This

Goldman Sachs (NYSE:GS) recommenced its coverage of Yahoo (NASDAQ:YHOO) with a Sell rating and a suggested price target of $14, citing deteriorating fortunes of its core business, even though it sees value on the company’s balance sheet. “While there is significant value on Yahoo’s balance sheet, we don’t expect management will be able to unlock it to shareholders’ benefit before Yahoo’s core business deteriorates further,” Goldman said in its analysis.

The internet has seen a 5% rise, year-on-year, in global minutes/user, whereas, in contrast, Yahoo has declined 5%, with usage down in its key segments such as search, mail, and entertainment. According to Goldman, search is a vulnerable area for Yahoo, even considering Microsoft’s one-year extension of its minimum revenue per search guarantee.

The search business accounts for about one-half of Yahoo’s EBITDA.

Here’s how Yahoo shares closed on the day:

Yahoo! Inc. (NASDAQ:YHOO): YHOO shares recently traded at $15.02, down $0.4, or 2.59%. They have traded in a 52-week range of $11.09 to $18.84. Volume today was 24,404,054 shares versus a 3-month average volume of 29,403,900 shares. The company’s trailing P/E is 18.38, while trailing earnings are $0.82 per share. Get the most recent company news and stock data here >>

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