Wall Street is surprisingly bullish on Yahoo's stock, despite all the drama around the company

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Marissa Ann Mayer, president and CEO of Yahoo!, arrives for the Metropolitan Museum of Art Costume Institute Gala 2015 celebrating the opening of

Thomson Reuters

Yahoo CEO Marissa Mayer

Despite all the drama and dysfunction surrounding Yahoo, Wall Street analysts think it's a stock worth owning.

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In fact, only 1 out of the 23 analysts who have rated Yahoo in the last 3 months have a "sell" rating, with the rest recommending either a "buy" (12) or "hold" (10), according to analyst tracking app TipRanks.

On average, they're expecting Yahoo stock to reach $37.62 in the next 12 months, up 8.1% from Wednesday's closing price.

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The positive ratings around Yahoo's stock show how analysts believe the street is undervaluing Yahoo's core business and the value that could be unlocked if Yahoo spins out the core or sells itself to another company.

"When you take out Yahoo stakes in Alibaba, Yahoo Japan, and the cash, investors are getting the core [business] for free," SunTrust analyst Robert Peck told Business Insider.

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That doesn't mean anyone expects Yahoo's troubled core business, which has suffered from several years of stagnant revenue growth, to rebound anytime soon. But with activist investors and bankers circling Yahoo, a turnaround in the core business might not be necessary for the asset to become more valuable.

Yahoo's core internet business, which includes its search and email services, currently draws nearly zero value from the public market. Yahoo's ownership in Alibaba and Yahoo Japan, and the $6.8 billion it holds in cash alone outstrips the roughly $33 billion market cap given to the company.

If the core business is spun out, the current Yahoo will turn into a holding company whose biggest value will come from its 15% ownership stake in Alibaba, currently worth $192 billion.

"Current share prices seem to imply zero value for the core, which we view as unfair given Verizon's $4.4 billion acquisition of AOL last year," Piper Jaffray analyst Gene Munster wrote in a note last month, referring to the deal size for AOL, a company that had less revenue than Yahoo. "Despite the negative environment around the company itself, we continue to believe shares have limited downside outside of a significant devaluation in Alibaba."

Analysts are not always right

But investors shouldn't buy too much into analyst notes, since they're based on their own estimates.

And if history is any indication, Yahoo stock price tend to move opposite analyst recommendations.

As noted by Bloomberg's Shira Ovide, Yahoo's stock more than doubled and had its best performance in a decade in 2013, when most analysts didn't recommended any action. But in late 2014, as analysts started writing upbeat notes, Yahoo shares started to tumble.

Perhaps, some investors are taking note of it. According to TipRanks, hedge funds had an overall negative sentiment towards Yahoo in the fourth quarter of 2015, with a number of them reducing their holdings in Yahoo.

We'll get a clearer picture of what to expect later this week, once the deadline to nominate new board directors pass.

Activist investor Starboard Value has indicated that it would launch a proxy battle if Yahoo doesn't listen to its recommendations, which include the sale of its core business and change in management. Yahoo hasn't made any of those moves yet, so it's highly likely that Starboard will kick off a proxy contest, in which case company shareholders will vote for directors among candidates fielded by both sides.

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