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Youku Tudou Outlook, Price Target Increased At Brean

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In a report published Thursday, Brean Capital analysts maintained their Buy rating on Youku Tudou Inc (ADR) (NYSE: YOKU). The price target was raised from $20 to $26. Although the company reported mixed results for 1Q15, its provided robust guidance for 2Q15.

Youku Tudou expects the strong top-line growth to continue in 2H, driven by robust growth in its consumer and brand ad divisions. The company guided to 53-59 percent net revenue growth for 2Q15, higher than the consensus forecast. The company expects its advertising revenue to see sustained strong growth, primarily driven by Youku Tudou's advertising initiatives associated with content marketing and programmatic buying.

For 1Q15, however, while the revenue beat the estimates, the company reported lower than expected EPS. The advertising revenue, in particular, beat both the consensus and the guidance, driven by advertiser numbers and ARPU.

"We are positive on the growth momentum of the company as YOKU continues to transform its business model, targeting multi-screen, building an entertainment and media ecosystem and seeking diversified revenue models," the analysts said.

The analysts believe that the company is on a fast track to growth, as well as improved margin profile and cost structure, driven by its content strategies and increasing focus on "leveraging big data to improve advertiser's ROI."

In addition, Youku Tudou partnered with Alibaba Group Holding Ltd. (NYSE: BABA) to launch two new products in April, Wanhuo and View-to-Buy. The company aims to continue with this partnership to build innovative ecommerce solutions, including an ecommerce platform that will connect ecommerce partners with Youku Tudou's content partners.

"We expect YOKU to further improve its brand ad monetization under its multi-screen entertainment and media strategy with increasing mobile contribution in 2015," the analysts added.

Latest Ratings for YOKU

Mar 2016Summit Research PartnersTerminatesHold
Oct 2015CitigroupInitiates Coverage onNeutral
Oct 2015CitigroupInitiates Coverage onNeutral

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Posted-In: Brean CapitalAnalyst Color Price Target Analyst Ratings


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