JPMorgan: Altaba's best bet is discounted resale to Alibaba
Seeking Alpha
Published Jun 29, 2017 01:19PM ET
JPMorgan: Altaba's best bet is discounted resale to Alibaba
- Altaba's (AABA -2.9%) best bet for monetizing its 15% stake in Alibaba (BABA -3.7%) -- now Altaba's chief reason for existing, after Verizon completed its buyout of the rest of Yahoo -- is for Alibaba to conduct a discounted buyback, JPMorgan (NYSE:JPM) says.
- That stake could be worth $76.5B by the end of 2018, the firm says, anticipating a 40% gain for Alibaba stock in that time frame.
- The best-case scenario has Altaba selling its patent portfolio, minority investments and stake in Yahoo Japan (YAHOY +1.5%), and then selling the rest to Alibaba in a tax-free deal.
- Alibaba would have to go for that, of course, but it would be "accretive to Alibaba shareholders as long as the shares are purchased at a discount to market value," JPMorgan says. The firm has an Overweight rating on Altaba and price target of $65, implying 21.8% upside from today's lower price.
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