21Vianet (VNET) PT Lowered to $7.50 at Stifel Following 4Q
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Stifel lowered its price target on 21Vianet (NASDAQ: VNET) to $7.50 (from $9.00) while maintaining a Hold rating. For FY17, VNET guided to revenues of RMB 3.7B-3.9B (3.8B mid) and adj. EBITDA of RMB 420M-460M (440M mid), implying 11.6% margins at the midpoint.
Analyst Matthew Heinz commented, "VNET revenues came in softer than expected in the quarter, missing our estimate by RMB ~37M (-8% y/y / 7% q/q), driven entirely by weaker performance in Hosting services (missed by RMB ~42M) – which we believe was mostly attributable to heavy pricing pressure in the CDN business. This was partially offset by higher MNS revenue, 52% y/y. The company reported adjusted EBITDA of RMB 52.0M (5.8% margin), missing our estimate by RMB ~8.9M as margins came in 73 bps below our model. While revenues and EBITDA missed our estimate, GM% was 122 bps better than expected driven by the cost of revenue beating our model by RMB ~39M. Despite adjusted net profit coming in more than RMB 2M below our model, VNET reported adjusted EPS of RMB -0.48 (-$0.07), in line with our model driven by a higher than expected share count."
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