Brean Murray Initiates Coverage on Changyou.com (CYOU) with a Buy; Attractive Online China Play

June 8, 2009 9:02 AM EDT

Brean Murray initiates coverage on Changyou.com (Nasdaq: CYOU) with a Buy. Price target $47.

Brean analyst says, "We believe CYOU represents an attractive play on the rapidly growing China Online Games industry. The company's key title, Tian Long Ba Bu (TLBB), continues to exhibit robust trends in our tracking effort. In addition, we remain optimistic that the company's second title, Duke of Mountain Deer (DMD), due in 4Q09, represents a fairly high probability play. We further believe that with deeper cash resources following its recent spin-off from Sohu, Changyou can meaningfully expand its distribution reach beyond Tier 1 and 2 cities, which historically have served as its core audience. Further, we view the access to Sohu's (Nasdaq: SOHU) 17173.com portal as an invaluable competitive intelligence tool. CYOU is trading at a discount to its peer group, and we believe this discount should close as investors gain greater comfort in the potential revenue diversification opportunity after the DMD launch."

To see more analyst ratings on CYOU Click Here.

Changyou.com Limited develops and operates online games in the People’s Republic of China. It engages in the development, operation, and licensing of massively multi-player online role-playing games (MMORPGs), which are interactive online games that are played simultaneously by various game players.

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