Brean Capital Cuts Price Target on 58.com (WUBA) to $57 Following Mixed 2Q
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Brean Capital maintained a Buy rating on 58. com Inc (NYSE: WUBA), and cut the price target to $57.00 (from $65.00), following the company's 2Q earnings report. WUBA reported 2Q16 revenue of $297.8mm, trailing consensus expectations of $302mm. Non-GAAP EPS was $0.15, exceeding the consensus estimate of a $0.12 loss by a solid margin on lower operating expenses across the board. The company provided 3Q16 revenue guidance in the range of $304mm - $331mm, below consensus expectations of $342mm.
Analyst Fawne Jiang commented, "WUBA reported mixed 2Q16 results with revenue missing but EPS beating consensus expectations. The company also provided soft 3Q revenue guidance mainly attributable to recent business model transition and agency clean-up efforts, which will put growth pressure on revenue in the near term. With the merger of Ganji and deconsolidation of 58 Home and Guazi, WUBA regained profitability in 2Q with significant margin improvement on strong operating leverage. Going forward, we expect to see continued margin improvement trend given better controlled operating costs on the back of improving operation efficiency and reduced investment pressure. Despite a short-term hiccup in revenue growth, we remain positive on WUBA and expect growth of the company to be back on track post-transition heading into FY2017. The long-term growth outlook remains intact, in our view. As such, we reiterate our Buy rating on WUBA stock and lower our TP to $57 (from $65) reflecting lowered estimates amid transition."
Shares of 58. com Inc closed at $46.03 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesEarnings, Definitive Agreement, Brean Capital
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