UPDATE: CICC Downgrades Phoenix New Media Limited to Hold on Persisting Margin Pressure

CICC reduced its rating on Phoenix New Media Limited

from Buy to Hold due to its lower-thanexpected results, weaker growth outlook and continuing margin pressure. CICC noted, "We believe that in a weak macro environment, online advertisers are likely to shift the tightened budget away from emerging channels, such as FENG, to focus on incumbent leaders. In addition, despite muted revenue growth, we expect FENG's costs and expenses to increase further in 2H12, as the high-speed (>50% YoY) daily UV expansion is expected to continue. We also believe the margin pressure will remain in 2013, as further investment is required for FENG to catch the growth trends in mobile Internet." Phoenix New Media Limited closed at $3.76 on Tuesday.