YHOO Yahoo

Thursday, February 7, 2008

YHOO Yahoo!: Stifel believes shares fully valued, swap into GOOG (28.57 )

Stifel calculated the expected value of YHOO shares at $29.72 per share, reflecting the estimated probability of several potential outcomes for Yahoo! in the wake of the Microsoft hostile takeover offer. Given the narrow 4% premium of expected value over the current share price, firm believes Yahoo! shares are fully valued and they would endorse swapping out of Yahoo! into shares of Google. Firm notes five scenarios: 1) MSFT succeeds in its current bid (30% chance); 2) MSFT wins with a higher $32 bid (40% chance); 3) MSFT wins, deal blocked, stock to $25 (10% chance); 4) Competing takeover offer at $34 (10% chance); 5) Yahoo! stays independent, stock to $23 (10% chance).