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Youku Tudou (YOKU) To Pull Earnings Levers as Uptake Nears Critical Mass

November 30, 2012 10:55 AM EST Send to a Friend
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Price: $19.03 --0%

Rating Summary:
    6 Buy, 11 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 12 | Down: 12 | New: 27
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Goldman Sachs maintained a Buy rating on Youku Tudou (NYSE: YOKU) with a price target of $23.00 following the China internet video company's Q3 earnings report on yesterday. The company's results were mixed with strength a Youku offset by disappointing sales at recent acquisition Tudou.

Commenting on the results, analyst Piyush Mubayi of Goldman Sachs said, "Youku's robust momentum, combined with the one-off nature of Tudou's weakness, strengthened our belief that the consolidated entity is on-track to break even in 2H13E. We model 6%/8% operating margin in 3Q/4Q13E, contingent on the outlook of ad demand and content price."

Youku Tudou plans to launch pre-roll ads and kickstart mobile monetization in 2013E, noted Mubayi, who thinks mobile with be a critical upside catalyst. Youku has become a default app on iOS and HTC devices in China, which will benefit the company as it pulls earnings levers.

"The rapid traffic uptake will soon achieve critical mass for ad distribution, which is particularly favorable for customers targeting at young & affluent demographics," said Mubayi.

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

Shares of Youku.com closed at $16.88 yesterday.




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