Yahoo would be worth far more to shareholders if it broke up its Internet businesses or embarked on a major overhaul, including a departure from Web search, but management is unlikely to do either, according to an analyst note issued on Friday.

Jeffrey Lindsay, analyst at Sanford C. Bernstein, said Yahoo's operations viewed separately could be valued as high as $39 per share, compared with a current share price closer to $27.

The shares rose 2.4 percent in pre-market trading to $27.80 from a close of $27.15 on the Nasdaq on Thursday.

The company, which lags Web search leader Google and faces greater competition for its e-mail services, could be worth as much $45 per share with a dramatic overhaul that would include outsourcing its paid search, cutting staff by 25 percent and restructuring its graphic display advertising, according to Mr. Lindsay.

"It appears that Yahoo will not take bold measures to right the ship," he wrote in a research report. "We believe that Yahoo still has a potentially high intrinsic value. We believe, however, that to stop the inevitable slide into irrelevance the management team must consider more radical actions and strategies."

Yahoo's main display advertising business appears to have deteriorated, mainly due to the company's troubles in effectively capitalizing on its ad network, Mr. Lindsay said.

He reiterated a "market perform" rating on the stock, with a $25 price target.

Lindsay said he based his valuation on Yahoo taken as separate businesses on the recent spate of Internet advertising acquisitions, such as Google's planned purchase of DoubleClick for $3.1 billion, among other factors.

He also recommended that Yahoo give up the fight on paid search and outsource that segment of its business to bigger rival Google.