UPDATE: Piper Jaffray Reiterates Neutral Rating, Lowers PT on Sohu.com
In a report published Wednesday, Piper Jaffray & Co. reiterated its Neutral rating on Sohu.com (NASDAQ: SOHU), but lowered its price target from $52.00 to $42.00.
PIper Jaffray noted, “We are maintaining our Neutral rating on SOHU and remain on the sidelines for the following reasons: 1) China's uncertain macro environment will likely continue to cloud visibility on brand ad spending; 2) The popularity of social media platforms such as Sina's Weibo and Tencent's IM pose a significant competitive threat to the health of Sohu's portal business, in our view; 3) Valuation: We are lowering our price target from $52 to $42, based on 11x CY13E EPS, representing a 15% discount to SOHU's 1-year next FY average P/E of 13x, to account for earnings visibility concerns. Our prior PT was based on the same 11x CY13E EPS, albeit on higher earnings. We would look to become more constructive on the stock once we gain more visibility on the outlook for brand ad spending, as well as on spending levels for online video content into FY13.”
Sohu.com closed on Tuesday at $40.18.
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