As it nears sale, Yahoo's earnings likely to reveal continued decline

Yahoo's chief executive, Marissa Mayer, speaks at the 2014 Cannes Lions in June in Cannes, France.
Didier Baverel | Getty Images

Despite Yahoo's not-so-sunny outlook, some analysts believe its impending sale will affect its stock price more than its current revenue.

Zacks' deputy manager Sejuti Banerjea said the main reason why Yahoo shares are up 13 percent year over year is not thanks to its stellar financials: It's thanks to its potential owner. Final bids for Yahoo are expected to come in Monday, with Verizon rumored to be the likely buyer. Prices have ranged from $3.5 billion to $5 billion.

Yahoo's second quarter earnings are scheduled to be reported Monday.

Though Yahoo is nowhere near its heyday, it still boasts a robust media sector, and is one of the top trafficked online destinations. Yahoo has also made moves to build up its advertising business, though some have argued that its facing massive ad fraud issues. It could make it attractive to a company like Verizon, which needs more media content to make itself an advertising powerhouse.

Analysts estimate that the company will report revenue of $1.08 billion, and 10 cents per share, according to Thompson Reuters.

RBC Capital Markets analyst Mark Mahaney predicted that Yahoo will report net revenue of $836 million. (Mahaney compares to consensus numbers on FactSet, which are $840 million.) He projected an EBITDA of $148 million, and GAAP loses of 2 cents per share. He gave the stock a $38 price target.

Mahaney's report cited neutral comScore web traffic trends, a decline in U.S. desktop search queries, the ongoing bids for Yahoo and the election of new board members for his reasoning. He also pointed out that paid clicks from search metrics were going down considerably for the company, and even though Yahoo display ad sales were going up, prices per ad were going down. In addition, though revenue from Yahoo's MaVeNs — mobile, video, native and social platforms — grew 7 percent year over year, revenue from its traditional advertising offerings is declining year over year.

Pivotal Research and SunTrust downgraded Yahoo to hold and neutral, respectively. Pivotal Research analyst Brian Wieser priced the stock at $41 a share, while SunTrust Robinson Humphrey analyst Robert Peck said prices would hover around $42 to $44 a share.