Deutsche Bank Downgrades Sohu.com (SOHU) to Hold; Margin Compression & Lower Earnings Visibility

Deutsche Bank downgraded Sohu.com (NASDAQ: SOHU) from Buy to Hold with a price target of $60.00.

Deutsche analyst says, "We believe the entire Sohu group (Changyou (Nasdaq: CYOU), the gaming arm, Sogou, the search arm and online video arm) will step into an investment cycle in 2012. This leads us to cut our 2012E and 2013E operating margins by 6.7ppt and 4.9ppt, respectively. Our 2012E and 2013E non-GAAP EPS are 36% and 28% lower than previously forecast, respectively. We believe visibility on returns of some of the investments (e.g. browser/search technology and emerging game areas) is low at current stage. We expect the market could further lower 2012E earnings."

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

Shares of Sohu.com closed at $51.84 yesterday.

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