The Internet analyst upgraded Yahoo stock to "overweight" and raised its price target from $37 to $43 per share.
"The bottom line: Obviously, Alibaba is nothing new to the Yahoo story, but we think as the IPO gets progressively closer, investors are going to put more weight in that Tencent comp, which I can get into, but that's going to yield a much higher valuation, and therefore you should own Yahoo," he said on CNBC's "Halftime Report."
Tencent Holdings, a peer of Alibaba traded on the Hong Kong Stock Exchange, has a market capitalization of $1.10 trillion.
Piper Jaffray was making a market in the securities of Yahoo! Inc. at the time this Munster's report was published.