Morgan Stanley keeps Qihoo overweight to 95.30 USD

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Beijing time November 25 Evening News, Morgan Stanley released its investment report today, maintaining the Qihoo 360 stock (Nyse:qihu) "Overweight" rating, the target share price from 80.40 U.S. dollars to 95.30 U.S. dollars.

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

Qihoo's net profit rose 240% in the third quarter of the 2013 fiscal year, mainly thanks to growth in search and mobile-related revenue. Qihoo Search traffic market share reached 23%, beyond the odd tiger before the expected. Search commercialization has also made progress, but the share of the revenue is still hovering around 1%, meaning that there is a larger space for ascension.

Third-quarter results: Revenue of 188 million U.S. dollars, an increase of 120%, compared with the company's guiding expectations of the upper limit of 3%. Net profit of 44 million U.S. dollars, an increase of 240%, higher than we expected 30 million U.S. dollars, mainly because of operating leverage.

Positive factors: 1 We expect the search advertising revenue to increase by 85% to 28 million U.S. dollars, accounting for 15% of total revenue, and the previous quarter was 10%. 2 based on our calculations, mobile-related revenue contributed 13% to 14% of revenue, compared to 10% in the previous quarter. 3 Mobile Security Users, navigation page users, as well as click Traffic Rose 42% to 174% respectively. 4) Qihoo search revenue less than 2% of Baidu revenue, but the market share has reached more than 30% of Baidu. 4) Qihoo is expected to increase the total revenue in the fourth quarter to 10% to 11%, up 100% to 102% year-on-year.

Negative factors: The monthly number of active PC users for 465 million, only 5% year-on-year growth, and China's internet users, mainly because Qihoo's PC penetration rate has reached 94%.

Valuation: We continue to maintain the "overweight" rating of Qihoo 360, raising the target share price from $80.40 to $95.30.