Summit Research Upgrades 58. com Inc (WUBA) to Buy

Summit Research upgraded 58. com Inc (NYSE: WUBA) from Hold to Buy with a price target of $75.00.

Analyst Henry Guo said WUBA shares' recent weakness creates buying opportunities, as they believe: (1) WUBA's recent strategic investments to Ganji and acquisitions of Anjuke and China HR significantly strengthen its dominance in the China online classified market, the space which we believe has ample growth potential longer term, considering millions of local merchants in China; (2) WUBA's O2O home services business is well positioned in the market, leveraging its early mover advantage and strong local consumer base/sales force; (3) Tencent's increasing investments to WUBA highlight WUBA's unique value in the China internet space. Going forward, we believe Tencent partnership should help WUBA further penetrate into mobile users and expand service offerings, and (4) Risk/reward is favorable as WUBA shares currently trade at 6.5x EV/sales our 2016E.

They believe multiple expansion is likely near term, on potential catalysts including: (1) further local merchants penetration in some key verticals, benefitting from scale, Ganji synergy, and Tencent partnership; (2) stabilizing margin on Ganji synergy despite continuing investments to growth initiatives, and (3) potential traction from its 58 Home services. In conclusion, we consider WUBA's strong local presence a valuable asset in the China internet space.

For an analyst ratings summary and ratings history on 58. com Inc click here. For more ratings news on 58. com Inc click here.

Shares of 58. com Inc closed at $62.60 yesterday.

You May Also Be Interested In

• RBC Capital Upgrades Galp Energia SGPS SA (GALP:LI) (GLPEF) to Outperform
• Singular Research Starts Citizens Inc. (CIA) at Buy-Long Term, 'Proven Distribution Growth'
• OncoCyte Corp (OCX) PT Raised to $4.25 at Needham