Credit Suisse Lifts Price Target on Sina (SINA) to $140 Following Social Networking Survey

Credit Suisse revised estimates and raised its price target on SINA Corporation (NASDAQ: SINA) from $127.70 to $140 following positive findings from a social medial survey. The firm reiterated their Outperform rating and called the stock the top pick in the sector.

According to Credit Suisse's social networking services (SNS) survey, Sina has the largest SNS access time market share (15.5%), the second-largest SNS user access time/day (31.9 minutes), and the second-highest penetration (51%).

"Sina micro-blog's success can be attributed to its early-mover advantage, success in adopting the hybrid naming system and strong execution," said analyst W. Cheung. "Although launched less than two years ago, Sina micro-blog has become one of the strongest Internet/SNS platforms in China. Indications are that this growth momentum will continue."

While the market is concerned about Sina micro-blog's monetisation ability, Credit Suisse's survey showed that its users "have a substantially higher ad attention ratio, and actual ad clicks than the market average, implying that advertising could be a viable, and highly successful, monetisation approach for Sina's micro-blog."

The firm noted the six potential business models for its micro-blog highlighted by CEO Charles Chao: 1) interactive targeted advertising; (2) social games; (3) real-time search; (4) mobile value-added services; (5) e-commerce platform; and (6) digital content distribution. "Given that the CS survey has shown that Sina micro-blog's general users have a substantially higher ad attention ratio than the market average, we believe advertising would be a viable, and even highly successful, monetisation approach for its micro-blog users," the firm said.

Credit Suisse cut its 2011 EPS by 16% on higher marketing cost assumptions, but raised 2013 EPS by 4% on higher advertising revenue assumptions, particularly real time search advertising revenue.

For more ratings news on SINA Corporation click here and for the rating history of SINA Corporation click here.

Shares of SINA Corporation closed at $106.28 yesterday.

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