TECH STOCKS: Yahoo Rallies; 'Holy Alibaba,' Says Analyst

By Benjamin Pimentel, MarketWatch

SAN FRANCISCO (MarketWatch) -- Yahoo Inc. shares jumped sharply Wednesday, partly on the Web portal's upbeat gains in its core business, but mostly on the reaccelerated growth in Alibaba, the Chinese Internet giant in which it owns a huge stake.

Yahoo (YHOO) shares climbed 6.5% to $36.43, their best day in nine months.

"Holy Alibaba," Bernstein Research analyst Carlos Kirjner told clients in a note. "Alibaba crushed expectations posting year-over-year revenue growth of 66% and massive margin expansion."

The Yahoo report is also expected to give Alibaba's much-anticipated initial public offering a boost. Yahoo owns a roughly 24% stake in the company, which has announced that it is planning an IPO in New York.

Wells Fargo analyst Peter Stabler upgraded Yahoo to outperform, citing Alibaba's gains, and "a belief that Yahoo core result improvements (although modest) should lead to a re-rating of investor valuation of the company's core assets, where we believe the company's still impressive audience scale and progress on ad platform redesign holds potential for further acceleration of display growth."

Yahoo's display business, which has been struggling, posted better-than-expected results, which some analysts say could be a modest, early sign that the Web portal's turnaround plan, under Chief Executive Marissa Mayer is working.

RBC Capital's Mark Mahaney maintained an outperform rating on Yahoo, telling clients in a note that Yahoo's earnings results "certainly don't suggest any negative-inflection fundamentals, which the market appears to be expecting for a few too many Net stocks, given the recent very broad correction."

Also rallying were shares of Google Inc. (GOOGL), which were up 2%. The Internet powerhouse was scheduled to report first-quarter results after Wednesday's closing bell.

Intel (INTC) also climbed 0.3% after the company reported slightly better-than-anticipated gross profit margin. On the downside, shares of Twitter (TWTR) were down 2%.

The Nasdaq Composite Index (RIXF) gained 38 points to 4,071. The Philadelphia Semiconductor Index (SOX) was off a fraction.

Other stories from MarketWatch:

Weibo IPO hit with warning of 'fast money'

Yahoo rallies on strong display, Alibaba results

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