UPDATE: Jefferies Downgrades Renren on Core Ads Eroding

In a report published on Thursday, Jefferies analyst Cynthia Mengt downgraded Renren (NYSE: RENN) from Hold to Underperform and raised the price target on the company from $2.70 to $3.30.

In the report, Jefferies stated, "Weak 2Q13 results were in-line with preliminary announcement. 3Q13 guidance is 24-27% below Street. Softness in games to remain as new games face intensive competition from larger platforms. Expect mobile ads monetization to come slow and Nuomi's bleeding loss to remain. Downgrade to Underperform; revise PT up to USD3.3 based on net cash per share of USD2.2 and USD405mn valuation of Renren's core business. Upside risk comes from M&A and/or asset divestiture."

Renren closed on Wednesday at $4.20.