Monday March 08, 2010
by Jim Trippon, editor The China Stock Digest
Sohu.com, Inc. (NASDAQ: SOHU) suffered a setback in February after delivering an earnings outlook below analyst’s expectations.
On February 1st Sohu announced that for the first quarter of 2010, it expects total revenues to be between $123.0 million and $128.0 million. The company expects fully diluted earnings per share to be between $0.78 and $0.83.
According to Reuters Estimates, analysts on an average were expecting the Company to report revenue of $139.9 million and earnings per share of $0.85 for the first quarter of 2010.
In its most recent report on February 8th, Sohu announced that its net profit reached $42.40 million in the fourth quarter of last year.
The company earned $59 million in the corresponding period in 2008. Earnings per share declined to $0.76 and total operating revenue dropped 1% year on year, hitting $135.8 million.
Clearly Sohu is still feeling the aftereffects of advertising revenue declines which have hit the entire Internet sector in China during the global economic crisis. Sohu is one of the two major Internet portals in China.
Our technical charts show a turnaround is probable in the very near term as the ten-day moving average moves up and MACD indicators return to positive territory after the recent earnings surprise.
Sohu remains a buy in China’s exploding Internet sector with a target sell price of $75 per share. We’re maintaining a buy up to price of $56.00 with a Profit Protector Stop/Sell Price of $45.00
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