Wall Street is surprisingly bullish on Yahoo's stock, despite all the drama around the company
In fact, only 1 out of the 23 analysts who have rated Yahoo in the last 3 months have a "sell" rating, with the rest recommending either a "buy" (12) or "hold" (10), according to analyst tracking app TipRanks.
On average, they're expecting Yahoo stock to reach $37.62 in the next 12 months, up 8.1% from Wednesday's closing price.
The positive ratings around Yahoo's stock show how analysts believe the street is undervaluing Yahoo's core business and the value that could be unlocked if Yahoo spins out the core or sells itself to another company.
"When you take out Yahoo stakes in Alibaba, Yahoo Japan, and the cash, investors are getting the core [business] for free," SunTrust analyst Robert Peck told Business Insider.
That doesn't mean anyone expects Yahoo's troubled core business, which has suffered from several years of stagnant revenue growth, to rebound anytime soon. But with activist investors and bankers circling Yahoo, a turnaround in the core business might not be necessary for the asset to become more valuable.
Yahoo's core internet business, which includes its search and email services, currently draws nearly zero value from the public market. Yahoo's ownership in Alibaba and Yahoo Japan, and the $6.8 billion it holds in cash alone outstrips the roughly $33 billion market cap given to the company.
If the core business is spun out, the current Yahoo will turn into a holding company whose biggest value will come from its 15% ownership stake in Alibaba, currently worth $192 billion.