Qihoo 360 's stock rating remained neutral (Neutral) unchanged

Goldman Sachs today released its research report, keeping Qihoo 360 Nyse:qihu's stock rating at "neutral" (Neutral) unchanged at a target price of 108 dollars.

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

Performance exceeded expectations: game business improves profitability, search business progress

-Performance exceeding expectations:

Qihoo 360 first-quarter results exceeded analysts ' expectations. Revenue for the first quarter was $265 million (up 141% per cent), with senior group analysts expected to be 17% and 16% higher than average Wall Street analysts, and yields on US depository receipts (not in accordance with US GAAP) For 0.54 dollars, the higher-sheng group analysts expected and Wall Street analysts expected to be 0.19 dollars higher than average.

Qihoo 360 expects the second-quarter revenue to be $300 million to $305 million (up 99% from the median of the expected range), which is expected to be 12% per cent higher than Wall Street analysts expect, according to Goldman Sachs Group analysts.

-Investment advice:

(1) Qihoo 360 in the first quarter of the mobile business revenue of 58 million U.S. dollars (of which mobile advertising revenue of 20 million U.S. dollars, mobile game revenue of 38 million U.S. dollars), compared to the previous quarter increased by 20 million U.S. dollars in the company's total revenue accounted for the proportion of 22%. While mobile revenue grew, the cost base remained largely stable, leading to a 5% rise in operating margins in the first quarter over a year earlier. Qihoo 360 's gaming platform already has 1000 games, attracting 1 million paid users, 75% of whom are mobile gaming users.

(2) Despite the adverse effects of seasonal factors, but Qihoo 360 in the first quarter of the search business revenue continues to increase by 9%, to 41 million U.S. dollars. Qihoo 360 's share of the desktop search traffic market has reached 25%, and the company's management reiterated its previous goal of raising its share of the market to 30% by the end of the year.

(3) In search commercialization, Qihoo 360 plans to upgrade its keyword auction system in the near future. We expect to increase the coverage of its business keywords by one time in the near future, and gradually push up the point rate and per click cost in the long term.

(4) Qihoo 360 has recently completed a deal to acquire a majority stake in Poly-Won, the latter being one of the leading advertising platforms in the Chinese market. It is expected that the commercialization efficiency of Qihoo 360 will be improved after acquiring the technology of poly-sheng Wan. The research team will integrate the technology of Wan in the next one or two quarters, and we expect the ad revenue of Qihoo 360 to grow faster after the integration is completed. Qihoo 360 Management estimates that by 2015 the Wan will likely increase the company's revenues, profitability and profitability.

We cut the $360 earnings per share forecast for fiscal year 2014 to 2016 by 1% to 6% to reflect the offsetting effect of strong growth in revenue and growth in marketing spending. We maintain the "neutral" rating of Qihoo 360, with a 18-month target of $108 (based on a 1 time-fold growth rate and a composite annual growth rate of earnings per share for the 29% fiscal year to 2014).

Risk：

Profit margin higher than expected or less than expected;