(SOHU) Sohu.com – Bear of the Day

November 3rd, 2009

While Sohu.com’s (SOHU) third-quarter earnings beat the Zacks Consensus Estimate and were in line with the company’s own guidance, the outlook for the fourth quarter was far below expectations. The company’s operating expenses have been steadily going up, which we fear could limit the growth in earnings.

Moreover, recent delays in game launches, weak ad spending — which is hurting the brand advertising revenue — and intense competition pose a threat. However, strength in its online games and portal business are expected to be the strongest drivers for
growth beyond 2010.

Currently, we see limited upside for Sohu’s revenue and earnings growth in the near term. We downgrade the stock to Underperform from our previous Neutral rating and set a six-month price target of $45.00.

Zacks Investment Research
View original at: Zacks.com News Feed

More on this topic (What's this?)
Guest Post: “War ALWAYS Causes Recession” (naked capitalism, 11/16/09)
"War ALWAYS Causes Recession" (George Washington's Blog, 11/15/09)
Sohu.com (SOHU) Continues Growing at Solid Pace (Fund my Mutual Fund, 2/16/09)
Weekly Recap (16--20 March) (Erik's market view, 3/20/09)
Read more on Sohu.com at Wikinvest


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