The focus for Yahoo investors shouldn't be CEO Marissa Mayer's turnaround efforts, but the value of its Asian assets, say analysts.
Yahoo posted better-than-expected earnings for the first-quarter, but revenue was light.
"The display revenue line remains challenged," Barclays analyst Anthony DiClemente told CNBC. "That's all there is to it."
He said user engagement remains down and that price per ad on the display side was slid 2 percent.
"If you look at pricing of both kinds of advertising that Yahoo sells, whether you're talking about search advertising or display advertising we saw notable declines," Scott Kessler, an analyst with S&P Capital IQ, told CNBC. "That is concerning."
Barclays' DiClemente said investors will need to give CEO Mayer six to eight quarters to develop new products that can increase user engagement and eventually lead to monetization, adding "because unless you have the impressions and clicks you can't really drive ad revenue."
In the meantime, investors may want to focus on Yahoo's Asian assets. "Those Asian assets are on fire from our perspective," DiClemente said. Yahoo owns 24 percent of China e-commerce firm Alibaba Group and 35 percent of Yahoo Japan.
Kessler agrees. "If you look at the investments in Yahoo Japan and Alibaba Group, as well the significant cash and investments what you have is arguably value that constitutes more than half Yahoo's market capitalization," the S&P Capital IQ analyst said. "That we think is really going to be the driver for potential realized value in the quarters to come."
Unlocking the value of those assets for shareholders could help buy Mayer time to pull off a turnaround of the core business.
"It could be that the value of those Asian assets are appreciating whereas value of core Yahoo is in this choppy challenged period until we can get some exciting products and services and better user engagement and better monetization," DiClemente said.
His bullish case for the stock is 15 percent to 20 percent upside.
The analysts had no conflicts to report.