Pacific Crown Securities: Sohu is in the initial stage of the investment cycle

Summary: View the latest quotes Beijing time November 4 afternoon news, the Pacific Crown Securities released today research Report, Sohu (Nasdaq:sohu) is in the initial stage of the investment cycle, and will continue to improve the profit situation, that its fair value for each share of 57 U.S. view the latest market

Beijing time November 4 afternoon news, Pacific Crown Securities published a study today, said Sohu (Nasdaq:sohu) is in the initial phase of the investment cycle, and will continue to improve the profit situation, that its fair value of 57 dollars per share.

The following is a summary of the report:

Expected

Sohu third quarter 430.4 million U.S. dollars in revenue is slightly lower than we expect 434.5 million U.S. dollars, the main reason for revenue below expectations is due to online games and brand advertising revenue. As the cost of swimming is lower than expected, the third quarter NON-GAAP (non-US general accounting standards) earnings per share of 0.61 U.S. dollars, better than our 0.82 dollar expectations. The 452 million dollar revenue guidance forecast for the quarter was slightly below our 456 million dollar estimate.

Search and expense are highlights

Although revenue data and guidance forecasts are not ideal, Sohu's search business is a bright spot, with third-quarter results flat, and fourth-quarter revenue-guidance forecasts ($ 120.5 million) far above our expectations ($ 100 million). The profitability of Sohu's search business has also been upgraded in the third quarter, and the upward trend is expected to continue in the next few quarters. Cost reduction is also a major highlight of the season, because the Sohu gaming subsidiary of the cost of swimming more moderate. We expect the cost of the tour to remain moderate, but still at a high level.

Sohu slowly out of investment cycle

We believe that Sohu is in the initial stage of the investment cycle. Although online video may still be a big challenge from a profit perspective, we find that Sohu's search and gaming business has improved profitability. According to the classification plus total valuation method, we think Sohu's fair value is 57 dollars per share. (PEI)