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Top-rated analyst says Verizon-Yahoo deal may fall through

Yahoo CEO Marissa Mayer
Jason Alden | Bloomberg | Getty Images

Top-rated analyst Laura Martin of Needham downgraded Yahoo to hold from buy on Tuesday, citing a potential withdrawal of Verizon's $4.8 billion offer to buy the ailing internet giant.

"We worry that VZ will walk away or renegotiate its acquisition price lower owing to a 2014 hacking event that YHOO had not disclosed," Martin wrote in a research note.

Yahoo announced the 2014 the hacking last month.

Martin's picks have a 20 percent one-year average return with a 70 percent success rate, according to analyst ranking service TipRanks, placing her in the top 1 percent of all Wall Street analysts covering any industry.

Here's her investment thesis, and why she thinks Yahoo shares may have reached a ceiling.