By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- Shares of Yahoo Inc. jumped
Tuesday after a UBS analyst told clients that the Web portal's
stock was "materially undervalued," citing the company's Alibaba
stake and gains in its core business.
Yahoo (YHOO) shares were up 2.6% at $34.87. UBS analyst Eric
Sheridan, who has a buy rating on Yahoo, told clients in a note
that "the market is materially undervaluing the sum of the parts in
Yahoo shares."
Sheridan cited Alibaba, the Chinese company in which Yahoo owns
a 24% stake and which is expected to go public soon. "We believe
Alibaba should continue to deliver outsized revenue growth on the
back of strong secular growth in China e-commerce," he wrote. He
also said Yahoo's core business, which performed better than
expected in the last quarter, "warrants a multiple more In-line
with peers."
Meanwhile, Microsoft Corp. slipped after the Department of
Homeland Security warned users to stay away from the tech giant's
popular Internet Explorer browser because of a serious security
flaw.
Microsoft (MSFT) shares were down nearly 1% at $40.60 in morning
trades. On Monday, the federal agency said an Internet Explorer
flaw "could lead to the complete compromise of an affected system,"
and urged users to switch to other browsers until Microsoft fixes
the problem.
The Explorer glitch erupted after Microsoft received fairly
upbeat reviews after the tech giant posted better-than-expected
earnings and new Chief Executive Satya Nadella unveiled a
"cloud-first, mobile-first" strategy.
IDC analyst Crawford Del Prete said he did not expect the
Explorer problem to have a long-term impact on the company.
"While its an important part of the Microsoft story, browsers
are not the point of leverage that they once were," he told
MarketWatch. "Microsoft will need to address this quickly, and once
they do, I don't expect significant long term fallout."
Despite Microsoft's decline, technology stocks were mostly
higher as the Nasdaq Composite Index (RIXF) gained 0.4% to 4,092.
The Morgan Stanley High Tech 35 Index (MSH) and the Philadelphia
Semiconductor Index (SOX) were each up a fraction.
Shares of Hewlett-Packard (HPQ) were up more than 2% after
Pacific Crest raised its rating to outperform from sector
perform.
Twitter (TWTR) shares rose 1% after a shaky start ahead of the
social network's first-quarter report due after the closing
bell.
Shares of eBay (EBAY) were trading flat, last down a fraction,
as the e-commerce company also geared up for its report.
Shares of Apple(AAPL) also slipped a fraction, while Netflix
Inc. (NFLX) gained 1%.
Other stories from MarketWatch:
Twitter, eBay roll out results to skittish investors
Twitter earnings: User growth again in focus
Still use Internet Explorer? Don't
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