The most likely outcome for Yahoo is a sale, SunTrust analyst Robert Peck says.
Peck has been the leading analyst on the Yahoo story. He was first to suggest that Marissa Mayer was in trouble, warning that investors were wary of her plan to spin out Alibaba shares. He was first to say Yahoo was likely to pause the spinout of its stake in the Chinese e-commerce company Alibaba.
Peck knows what's going on, and so when he says something, people should listen.
On Wednesday, Yahoo announced that it would not spin out Alibaba and would instead spin out its internet businesses.
On a call with analysts, Yahoo chairman Maynard Webb said, "There is no determination by the board to sell the company or any part of it."
Webb said he thought that Yahoo was undervalued and that the company's focus would be on revitalizing the company and getting investors to properly value the company.
He also said, however, "The board has fiduciary obligation to engage with any legitimate person that comes forward with a good offer."
Peck believes that's more likely to happen. He says a strategic buyer like Verizon or a private-equity firm is likely to step in and buy Yahoo, as opposed to Yahoo trying to figure out how to spin out its internet business.
"Given the simplicity and speed of a sale and the lack of a desire by investors to undergo a year-long spin process, we think a sale of the core or entire company is most likely," Peck writes.
He believes a sale happens in the first half of 2016 because investors are impatient, the core business isn't getting better, and the board wants to avoid a proxy war with shareholders.
What is Yahoo's core business worth? Peck says $6 billion to $8 billion, which is five times a projected Ebitda (a financial term that gives a view of the operating profit of a business).
Here's his breakdown of the Yahoo business:
