Goldman Sachs Comments on SINA's (SINA) Q1 & Guidance; Analyst Notes Impact from Revoked Video Licenses

Goldman Sachs maintained a Buy rating on SINA Corporation (NASDAQ: SINA) and lowered its price target to $61.00 (from $63.00). Analyst Piyush Mubayi ties below-consensus guidance to news the government revoked its internet publication and video licenses.

"SINA reported 1Q14 non-GAAP revenues of $167mn (-13% qoq, +38% yoy), in line with GSe/Bloomberg consensus. Non-GAAP operating loss of $4.8mn (vs GSe of $9.1mn profit) reflected +67% yoy in sales & marketing and +44% yoy in product development costs. Non-GAAP EPS of $0.15 was 2X GSe. 2Q non-GAAP net revenues were guided to $177mn-$182mn, +17% yoy at the midpoint, 9%/7% below GSe/consensus, primarily due to the impact from the revoked licenses," said Mubayi.

"Since the receipt of government notices that revoked its internet publication and video licenses, SINA has been working with authorities to arrive at a solution. We believe the below-expectation 2Q guidance has incorporated the potential impact, which we estimate to be 5%-8% of the advertising revenues in a worst case scenario (i.e., if SINA is not allowed to operate its video business ). With the proceeds from Weibo’s IPO, management highlighted three key investment areas: (1) Mobile: SINA plans to step up the development and promotion of new apps, targeting to drive mobile ad towards 10% of overall revenues, from the current sub-5% level. (2) Video is important to SINA’s long-term portal strategy, but content acquisition has been delayed due to the license overhang. (3) Vertical ads: SINA plans to expand content and service offerings in the key verticals, including finance, sports, and automobile. To reflect the intensive investments and license overhang, we cut our 2014/15 EPS by 22%/21% and fine tune 2016 EPS. We thus lower our 18-month SOTP-based target price to $61 from $63, implying 27% upside potential," added the analyst.

For an analyst ratings summary and ratings history on SINA Corporation click here. For more ratings news on SINA Corporation click here.

Shares of SINA Corporation closed at $47.86 yesterday.

You May Also Be Interested In

• Commerzbank AG (CBK:GR) (CRZBY) PT Raised to EUR14.70 at Citi
• UBS Downgrades SSP Group Plc. (SSPG:LN) (SSPPF) to Neutral
• Warner Music Group (WMG) PT Raised to $38 at Loop Capital