One Wall Street analyst sees Yahoo nearly at its full valuation and changes his firm’s rating from “buy” to “hold” while remaining bullish on the company’s long-term prospects.
Life is a constant movement—rhythmic as well as random; life is a constant change and not stagnation. Instead of choicelessly flowing with this process of change, many of these “masters,” past and present, have built an illusion of fixed forms, rigidly subscribing to traditional concepts and techniques of the art, solidifying the ever-flowing, dissecting the totality.
— from Bruce Lee’s essay “Liberate Yourself from Classical Karate”
Legg Mason analyst Scott Devitt believes shares of Yahoo have hit close enough to a price target that the online portal company is now fully valued. BusinessWeek reported.
In response, trading sent shares of YHOO down $1.09 to $41.04 at press time. Even though Legg Mason thinks Yahoo is a better hold than buy right now, the firm does see brighter prospects for Yahoo than its highly valued search rival Google:
He notes that at current valuations, he continues to favor Yahoo over Google, and he believes Yahoo’s strategy will prevail in the long term. He notes that unlike Google, Yahoo’s long-term protective moat is insulated from technological change; also, Yahoo has a seasoned management.
Yahoo’s strategy recently has been to emphasize content and deploy an advertising network to compete with Google’s AdSense. The Sunnyvale-based company has a lengthy list of services available to its visitors and registered users, while Google’s embrace of web-based email and instant messaging is comparatively recent.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
