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  1. #1
    Specialist Member RCox's Avatar

    Yahoo Trade: Earnings Come with Stock at Elevated Levels !!!

    Yahoo Trade: Earnings Come with Stock at Elevated Levels

    This week's earnings reports are heavily centered in the tech and finance sectors. One of the best trading opportunities is seen in Yahoo! (YHOO), which will release 1st quarter earnings after the market close on Tuesday. Yahoo! is resting on high hopes, with the stock closing in on its best price levels in 5 years. There is some scope here, however, for a downside disappointment with display advertising showing weakness, and increased competition from FaceBook and Google putting pressure on the ability for all three companies to improve on margins.

    The consensus estimate is calling for $1.1 billion in revenues (which would be a 2% yearly increase), and 24 cents in terms of earnings per share. This will likely depend on the display ad revenue, so this is also a key number to watch. Given the elevated level in the stock, a downside surprise creates much better trading opportunities. The technical picture supports this assessment, as levels to watch on the downside are seen at 23.80, which is the 61.8% Fib retracement of the rally from just above 23. To the topside, we will need to see a bigger extension, as the key area of resistance comes in at 25. An upside break creates a bullish bias, suitable for daily CALLS. A break to the downside can be used to initate even shorter term PUT positions (i.e. hourlies) or dailies.

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  2. #2
    Specialist Member RCox's Avatar
    Yahoo earnings for the first quarter showed better-than-expected earnings of $420 million, 38 cents per share. Revenues were flat yearly, at $1.07 billion. Analysts estimatess called for revenue of $1.1 billion, 24 cents EPS.

    Prices didn't break the bull CALL level of 25, so no trade was triggered. Prices actually failed in that area so the tech levels were well-placed.

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    Last edited by RCox; 04-16-2013 at 09:05 PM.

  3. #3
    Solid Member susan's Avatar
    The Yahoo stock price is 23.25 now not too far from the 5 years top at 24.7. I think it is overvalued for the moment and there will be pressure on the price in the coming weeks and probably months. I like the Yahoo business model. It looks pretty stable, but we have to say that Yahoo could not compete more with the new internet giants like Google, Facebook and even LinkedIn. It is an ancient remaining of the rise of the web industry. It is still alive, but not so viable like the new alternatives.

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