Yahoo (YHOO) posted third quarter EPS of 17 cents on a 47% revenue rise. Piper Jaffray reiterated its outperform rating on the shares.
Analyst Safa Rashtchy says the third quarter showed upside above his, and the Street's, estimates: $932 million in in revenue vs. his $909 million forecast and the Street's $918 million; 15 cents EPS (excluding one-time items) compares to his 13 cents and the Street's 14 cents. Rashtchy believes strength was equally divided among search and advertising, showing balanced growth. The analyst raised his $4.606 billion 2006 revenue estimate to $4.979 billion and his $2.0 billion EBITDA forecast to $2.155 billion. He believes 2006 search revenues could provide additional upside. Rashtchy says Yahoo is a 40%+ organic grower, getting EV/EBITDA of 18 times, vs. 23 times, for comps. He feels Yahoo represents the best large cap value in the Internet,and raised his price target to $45 from $43.