SINA‘s (SINA) online advertising business has continued to do well and has built a competitive edge. The company expects strong growth in advertising revenue and resurgence in margins in 2010.

Third-quarter results exceeded the company’s own guidance and beat Zacks Consensus Estimates. Moreover, SINA is witnessing signs of strong recovery in the advertising market of China, which is reflected in the company’s higher-than-expected guidance. We expect SINA to benefit from the growing trends in the wireless business and expect a huge improvement in its advertising business, as advertising spending recovers. However the failed acquisition of Focus Media does not bode well for the company.

SINA has a strong net cash position. We see further upside to the stock and thus raise our earnings estimates for 2010. We are upgrading SINA to Outperform from Neutral but maintain our six-month price target of $50.00.

Zacks Investment Research

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