While Squali has a $43 price target and a "buy" rating on the stock, he said that current valuation of the company assigns no value to Yahoo's core business.
For the third quarter, analysts expect Yahoo to post earnings of 30 cents per share on revenue of $1.05 billion, according to Thomson Reuters forecasts. Year over year, that's an 11 percent decrease on the bottom line and a 3 percent decrease on the topline.
The company's display ad business appears most vulnerable to negative trends, analysts said.
RBC estimates the company will see a 7 percent decrease in display revenue excluding traffic acquisition costs (ex-TAC), as the company continues to struggle in the space against competitors such as Google. Last quarter the company didn't do much better when it reported an 8 percent drop to $436 million.
"Fundamentally, these weak display revenue trends remain probably the most important evidence of the company's overall challenged competitive positioning," RBC Capital's Mark Mahaney said in a note.
Search revenue has also been decelerating this year, shrinking from 9 percent growth in the first quarter to 6 percent growth (ex-TAC) in the second quarter. RBC estimates that in the third quarter the company's search revenue will grow only 4 percent.