Why Yahoo's Marissa Mayer Gets A 'C' Rating After Her 3-Year Mark

In a report published Wednesday, SunTrust Robinson Humphrey analyst Bob Peck discussed why it is "natural" for investors to begin gauging the successes and failures of Yahoo! Inc. (NASDAQ: YHOO)'s CEO Marissa Mayer at her three-year anniversary.

"Marissa Mayer's strategy has focused on people, product, and traffic which then leads to revenue - knowing this would take years not quarters," Peck wrote. "In analyzing the metrics at the three-year mark we think the results are mixed."

Peck said that the product traction for "MaVeNS" (mobile, video, native, social) is "not universally positive" while executive turnover continues. The analyst added that "most importantly," revenues and EBITDA have declined over the past three years while the company spent $6 billion in R&D, acquisitions and capital expenditures.

On the other hand, the company has seen some success since 2012. Peck cited ramping mobile, renegotiating the Search agreement, Mozilla Search, participating in large acquisitions, updated at tech stock, returning cash to investors, reducing the amount of Alibaba Group Holding Ltd (NYSE: BABA) to sell, and finally, orchestrating the pending Alibaba spin.

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However, despite the many positives, Peck suggested that Yahoo needs to "provide a clearer path to growth and profitability" in order to see further successes.

Looking forward to Yahoo's second quarter print, Peck is expecting the topline to "remain challenged" and could potentially fall short of expectations. In addition, the analyst thinks that costs remain "inflated" and if progress is not made on stabilizing core financials, pressure will mount from investors.

Shares remain Buy rated (due to an expected favorable tax outcome from the Alibaba spin, and the market is already discounting the core's challenges) but with a price target slashed to $50 from a previous $59.