Barclays Upgrades SOHU to target $79
Last week's wider-than-expected quarterly loss for SOHU wasn't enough to keep Barclays from raising its price target on the stock to $79 from $73 ahead of the bell. On the charts, the equity has tacked on 40.4% year-to-date to linger near $66.46, but expectations remain low. At the ISE, CBOE, and PHLX, SOHU's 10-day put/call volume ratio of 1.06 ranks in the bearishly skewed 91st percentile of its annual range. Additionally, short interest rose 8.5% over the last two reporting periods, and now accounts for a healthy 6.9% of Sohu.com Inc's available float.
On Nov 1 Sohu.com Inc. reported earnings of 45 cents per share in the third quarter of 2013, which decreased 34.4% year over year and 19.1% on a sequential basis. Earnings including stock-based compensation comfortably beat the Zacks Consensus Estimate by a nickel.
Revenues
Revenues jumped 29.1% year over year and 8.7% sequentially to $368.3 million, towards the higher end of the management guided range of $358.0–$370.0 million. Revenues also surpassed the Zacks Consensus Estimate of $364.0 million. The year-over-year increase was primarily driven by strong performance from the online advertising and online gaming business.
Online advertising revenues surged 56.5% year over year and 21.0% sequentially to $177.1 million. The year-over-year growth was primarily driven by strong performance from online video, Sogou, search and brand advertising.
Sohu video continued to maintain its dominant position, driven by a content portfolio that includes American television drama series, Japanese animation series, domestic variety shows and in-house programs.
During the quarter, Sohu Video streamed The Voice of China, which attracted significant traffic. The superior content portfolio helped video advertising sales to triple on a year-over-year basis and was up 60.0% from the previous quarter.
Sohu achieved significant growth in the mobile video segment as traffic increased massively in the third quarter. To-date, total number of active users for Sohu’s mobile applications reached 140 million.
Sogou revenues continued to grow in the quarter, up 53.0% year over year and 14.0% quarter over quarter to $57.0 million. The Sogou pinyin mobile version added another 30 million new users as monthly active users reached 180 million.
Search and Others revenues jumped 48.2% from the year-ago quarter and 13.3% sequentially to $46.2 million.
Brand advertising revenues grew 60.2% from the year-ago quarter to $124.8 million and were close to the higher end of management’s guided range of $120.0 million to $125.0 million. Revenues increased 24.5% sequentially, within management’s guided range of 20.0% to 25.0% growth. Brand advertising continued to benefit from strong traffic driven by an improving online video business.
