Market Overview

UPDATE: Deutsche Bank Downgrades SouFun On Take-Rate Drops, NP Impact From Discounting

Related SFUN
This Chinese Internet Portfolio Surged 6X More Than The S&P 500 Over The Past Month
Earnings Scheduled For November 18, 2015

In a report published Thursday, Deutsche Bank analyst Vivian Hao downgraded SouFun (NYSE: SFUN) from Buy to Hold and lowered the price target to $11.00.

The company announced a 40 percent discount on nationwide subscription fee to secondary listing customers, making up approximately 25 percent of revenues. Deutsche Bank sees this as a "major downside surprise for the market," The analyst sees a magnified de-leveraging impact to its NP due to the higher margin nature of the segment.

Hao wrote, "We believe SouFun is facing deteriorating economics around its SouFun card business such that take-rate with developers will continue to decline. We attribute this to: 1) aggressive effective take-rate offered by competitor in tier-1 cities, and 2) land grabbing strategy in lower-tier cities along with deepening geographical penetration."

The analyst expects continued drops in take-rate.

Deutsche Bank lowered t FY14/15/16E revenue forecast by 8 percent/12 percent/15 percent.

Shares of SouFun closed at $10.64 on Wednesday and are currently trading at $9.50, down 10.71 percent.

Latest Ratings for SFUN

Oct 2015CSLADowngradesBuyOutperform
Aug 2015CLSADowngradesBuyOutperform
Jun 2015BarclaysInitiates Coverage onOverweight

View More Analyst Ratings for SFUN
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Vivian HaoAnalyst Color Downgrades Price Target Analyst Ratings


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