Analysts Positive on Yahoo! Inc. Despite Alibaba Spin Off IRS Tax Rumors
TipRanks | May 20, 2015 10:17AM ET
Yahoo! (NASDAQ:YHOO) shares plummeted 8% during trading on the afternoon of Tuesday, May 19 and rebounded up 2 % in pre-market trading the following morning after the company affirmed plans to spin off e-commerce giant Alibaba (NYSE: NYSE:BABA) despite rumors that the IRS will tax the move.
The stock drop was due to investors overreacting to an IRS official’s statement made on Tuesday. The official commented that the tax-collecting agency is considering to start taxing company spinoffs, which are usually not taxed.
In a blog article posted on Wednesday morning, Yahoo officials noted, “Yahoo understands that the IRS’s statement is not specific to Yahoo’s planned Q4 2015 spin-off of its remaining stake in Alibaba Group and Yahoo Small Business, reflects no change in applicable law, and does not affect previously filed ruling requests. Yahoo continues to work toward completing the planned spin-off in Q4 2015.”
When Yahoo filed with the IRS earlier this year, the company’s stake in Alibaba was worth approximately $40 billion. Yahoo investors are expecting a decent return from the Alibaba spin-off once it is complete and does not want a change in IRS tax rules to affect that.
On May 20, Bank of America analyst
Overall, the analyst has a 68% success rate recommending stocks and a +18.7% average return per recommendation.
SunTrust analyst
Robert Peck has an overall success rate of 59% recommending stocks and a +12.7% average return per recommendation.
On average, the top analyst consensus for Yahoo on TipRanks is Moderate Buy.
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