BofA Merrill Lynch launches investment report today

The following is a summary of the contents of the report:

Qihoo's second-quarter revenue was 6% higher than the market forecast, with a diluted earnings of $0.26 per share, 110% higher than market expectations. We believe that this is mainly due to a number of new strategies, such as search and mobile games, which will continue to push Qihoo revenue to grow steadily 2015 years ago.

We expect the second-quarter search and mobile gaming business to contribute more than 20% of revenue. In the future, the year-on-year increase in these two businesses will reach 171% and 90%, respectively, and contribute 44% and 55% of revenue in 2014 and 2015 respectively.

To this end, we will be the Qihoo 2013, 2014 and 2015 fiscal year revenue forecasts to increase by 7%, 8% and 15% respectively. Thanks to operational leverage, the projected earnings per share of fiscal year 2013, fiscal 2014 and fiscal 2015 are expected to increase by 66%, 57% and 54% respectively.

Qihoo expects the company's third-quarter revenue to reach $181 million trillion to $183 million trillion, up 115% to 118% per cent year-on-year, and a median of 14% above Wall Street expectations.

We maintain the "buy" rating of Qihoo 360, which will increase the target stock price to 84 US dollars.