What happened
Worries about a potential attempt by Russian state bank Sberbank to expand its ownership stake in Yandex (YNDX) shaved dozens of percentage points off the Russian internet giant's share price earlier this month. Strong earnings by Yandex earlier this week helped to allay those worries -- as a more profitable Yandex is certainly a good thing for investors, regardless of whoever ultimately controls it.
What's really getting investors excited about Yandex today, though, is this:
According to a UBS analyst -- quoted on TheFly.com -- Yandex "is now considering strategic options with regards to potential hostile takeover defenses." Hearing that, investors rushed to bid up Yandex 9.3% by Wednesday's close.
Image source: Yandex.
So what
If Yandex succeeds in fending off a takeover attempt by Sberbank -- or if, by announcing its determination to do so, it dissuades Sberbank from attempting to buy a blocking stake in the first place -- this would remove a sizable cloud of worry that's been hanging over Yandex stock these past couple of weeks.
Without that worry, investors would be freer to focus on the 39% year-over-year (ruble-denominated) sales growth Yandex exhibited earlier this week -- and the 461% increase in Yandex's per-share earnings.
Now what
Yandex shares currently trade for a mere 14.3 times trailing earnings -- but are pegged for better than 40% long-term earnings growth on Wall Street. At a resulting PEG ratio of just 3.5, I'd argue the only thing standing between Yandex -- and investors recognizing Yandex as an out-and-out bargain of a growth stock -- is the threat of the Russian state coming and taking that bargain away for itself.
Today's 9% price spike on news Yandex doesn't intend to let a takeover happen is the best proof of that.
