Maintain Qihoo 360 stock (Nyse:qihu) Buy rating

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

Beijing Dongcheng Court February 20 to Baidu sued Qihoo 360 unfair competition case to make a first instance verdict, found that the defendant Qihoo 360 malicious induced user shielding Baidu ads is improper behavior, decree its home page to publish an apology statement, and compensation Baidu company 230,000 Yuan. We believe that the ruling has little effect on Qihoo 360. Before, Qihoo 360 in this field already has 15 times loses the record.

After successfully launching the search business and taking a place in the mobile application publishing market, Qihoo began to capture business opportunities in these areas. In view of the successful commercialization of Qihoo in browsers, we believe Qihoo has the ability to gain revenue in mobile gaming publishing and search. At the beginning of the new year, these two businesses showed strong growth momentum. We expect the search market to grow at 30% a year from 2013 to 2016, and it is believed that the market leader will benefit from it, including Baidu, Qihoo and Sogou.

This year, the smartphone gaming market is expected to double to $3.5 billion trillion. Some small mobile games release rivals ' share will be eroded by big rivals such as Tencent, Baidu, Qihoo, Alibaba, pea clips and music nets. We expect that this will drive the growth of Qihoo in the medium to long term. To this end, we will be Qihoo 2015 and 2016 fiscal year revenue forecasts respectively to increase by 7% and 9%, while the Qihoo target share price to 117 U.S. dollars.