Yahoo Inc shares rose on Friday to the highest since February last year and options surged after American Technology Research said the stock will be boosted by the initial public offering (IPO) of Alibaba.com Ltd.
Yahoo owns 39 percent of Alibaba.com (阿里巴巴), China's largest trading Web site for companies. The IPO is a "tremendous value creation opportunity," Rob Sanderson wrote in a research note.
Alibaba.com, which starts trading in Hong Kong on Nov. 6, will add US$2.50 a share to Yahoo's stock, the San Francisco-based analyst said.
PHOTO: REUTERS
Yahoo shares rose US$2.29 -- or 7.3 percent -- to US$33.63. They have jumped 33 percent in the past year, compared with the 11 percent rise in the Standard & Poor's 500 Index.
He raised his share-price estimate for Yahoo by 11 percent to US$41.
Sanderson has a "buy" rating on the Sunnyvale, California-based owner of the most-visited US Web site.
Hangzhou-based Alibaba.com Ltd and its parent Alibaba.com Corp might raise as much as HK$11.6 billion (US$1.5 billion) in Hong Kong, the largest Internet IPO after Google Inc's US$1.9 billion share sale in August 2004, data compiled by Bloomberg show.
Options traders increased bets that Yahoo shares would climb 19 percent in three months. There were 185,750 January US$40 calls traded, or 36 percent of Yahoo calls that changed hands on Friday.
"People are positioning to profit on the way up as the stock has been rallying and to get the most bang for their buck," said Peter Bottini, executive vice president of trading at OptionsXpress Holdings Inc, a Chicago-based online brokerage.
The price of January US$40 calls, which were the most-active Yahoo contracts, more than doubled to US$1.07.
November US$35 calls, the second-most traded, more than tripled to US$1.18.
January US$35 calls, the third-most trades, almost doubled to US$2.48.
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