Deutsche Bank Comments on Shanda Interactive (SNDA), Core Business Improves as Profitability Outlook Remains Dim

Deutsche Bank is reaffirming its Hold rating and $35.10 price target on shares of Shanda Interactive (NASDAQ: SNDA) ahead of the release of its second quarter earnings.

The company is expected to report its second quarter earnings on August 31. The firm is currently forecasting Q2 non-GAAP EPADS of RMB2.42 and GAAP EPADS of RMB0.80, vs the consensus of GAAP EPADS of RMB1.50. Revenue for the quarter is estimated to be RMB1,724 million vs. consensus of RMB1,683 million while operating income is expected to be RMB90 million vs. consensus of RMB181 million.

The firm believes thatt SNDA will release its second quarter results well below expectations due to increasing loses from Ku6, which reflects a strategic shift and corporate restructuring, and amortization related to M&A. Deutsche Bank also anticipates that the operating loss from Shanda Literature increased from RMB4 million in the first quarter to RMB8 million in the second quarter.

An analyst at Deutsche comments, "We highlight that Ku6's revenue declined 39 percent quarter-over-quarter in spite of otherwise positive seasonality. Our outlook for Shanda's non-gaming business remains challenging for the next several quarters."

For more ratings news on Shanda Interactive click here and for the rating history of Shanda Interactive click here.

Shares of Shanda Interactive closed at $33.16 yesterday.

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