What’s Driving Yahoo’s Stock Up?

Yahoo! (NASDAQ:YHOO) beat expectations Monday afternoon with its quarterly earnings report, and the stock was reacting positively. Yahoo shares climbed before Tuesday morning’s open, up over 3 percent in pre-market trading, but backed off slightly after.

Yahoo’s quarterly results might have had some investors giddy behind the gates, as they were released after Monday’s close. The results cast Yahoo in a positive light, posting a full-year gain in revenue for the year — its first since 2008. Yahoo’s gain was modest, but showed the company has more potential than it used to.

The company’s new CEO, Marissa Mayer, may have something to do with the turnaround. Mayer joined Yahoo in mid-July, after working at Google (NASDAQ:GOOG), and since her arrival, hares have climbed over 30 percent. Adding to the positivity, the company’s ad prices were higher and more money came from overseas investment…

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Yahoo does still have some weak points, though. The Internet ad market’s growth is outpacing Yahoo, showing that it might be having trouble developing a stronger ad system. The company saw less money coming in from display advertising and its guidance also dropped below expectations.

Cantor Fitzgerald analyst Youssef Squali and Jefferies analyst Brian Pitz both kept a “Hold” rating on the company’s stock, but Squali suggested a price target of $21, while Pitz had lower expectations at $20 a share.

There is clearly still some uncertainty about how the company will continue to fare. There is still the matter of the company potentially selling its remaining Asian assets and also a public offering of Alibaba Group, a Chinese Internet company of which Yahoo owns a portion.

For now, Yahoo’s share price is floating between Squali and Pitz’s advised price target, but has been staying closer to Squali’s target early in the morning.

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