Markets & Finance

Analyst Actions: Yahoo, Wal-Mart, Bidz.com


Opinions from analysts around Wall Street on Tuesday

From Standard & Poor's Equity ResearchCIBC WORLD UPGRADES YAHOO TO SECTOR OUTPERFORM FROM SECTOR PERFORM

CIBC World analyst Jason Helfstein says the Yahoo (YHOO) upgrade is based on his analysis of the valuation of its non-operating assets and a pullback in its share price. He says Yahoo now offers an attractive 3 times risk-reward ratio using historical valuation metrics. He thinks the company's stake in Chinese e-commerce provider Alibaba Group, which recently went public, is now worth about $4 a share, bringing the total value of non-operating assets to about $9 a share.

Helfstein notes his analysis of Yahoo's historical trading multiple suggests a $31 fair value, or 26% potential upside, using 2006-07 average p-e of 27, while a trough p-e of 20 suggests only 9% downside. He ups $28 target price to $31.

MORGAN STANLEY REITERATES OVERWEIGHT ON WAL-MART STORES

Analyst Gregory Melich says that third quarter results confirmed Wal-Mart Stores (WMT) as a "Formidable Five" charter member, "one of the best places to be in retail during the slow drip deceleration into 2008."

Melich notes that Wal-Mart's third quarter sales grew 8.8% globally, aided 130 basis points by foreign exchange; U.S. comps were 1%, the plan is for 0%-2% in the fourth quarter. He also notes that third quarter EPS of $0.69 (excluding $0.01 real estate sale gain) grew 10% year-over-year, and Wal-Mart upped fiscal year 2008 (January) guidance to $3.13-$3.17.

He says, while he still believes the Street is too high at about $3.40 EPS for fiscal year 2009, the risk to Wal-Mart's numbers appears to be less than retail generally. He maintains $51 target price.

THINKEQUITY RAISES TARGET ON BIDZ.COM

Analyst Ed Weller says Bidz.com (BIDZ) third quarter sales soared 48%, while EBIT quadrupled. He says, along with having cash to buy goods, the company believes most salable (rather than what can be bought on credit) and Bidz also having goods produced to order. Now accounting for almost a third of sales, he says constant availability of such always-in-demand styles improves conversion and satisfaction.

He notes Bidz program of buying larger quantities of goods than would be "naturally" salable provided that vendor contribute to "coop" advertising to deliver traffic to support higher sales is delivering both higher sales and much higher margin. He raises $0.53 2007 EPS estimate to $0.56; and $17 target price to $20. He keeps buy opinion on the stock.


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