Youku.com (YOKU) PT Cut at Maxim Group, 'Sell' Maintained

Maxim Group analyst Echo He cut his price target on Sell-rated Youku.com (NYSE: YOKU) to $18.00 (from $24.00) saying it is facing fundamental difficulties regardless of external investment.

He comments, "The ongoing online video market clean-up initiated by the Chinese government has brought down a number of popular domestic and international titles. In our view, the withdrawal of content may be temporary and may not generate material impact to the revenues of major online video players, including YOKU. However, it is evident that regulatory risk is tangible and, thus, a long-term concern to China's online video market."

He added, "The market concerns on YOKU are also reflected in its price declines after Alibaba’s (private) $1.22B investment (for an aggregate 18.5% equity on a fully diluted basis), despite the price of $30.50/share carrying a 26% premium to YOKU's closing price in prior trading day. Although YOKU could use the cash to fuel content purchase, marketing, and vertical integration, the investment may not improve YOKU’s fundamental issues in market share and profitability. "

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

Shares of Youku.com closed at $22.29 yesterday.

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