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Expected Share Price Gains on Some Internet Stocks (GOOG, YHOO, AOL, LNKD, MWW, DMD, RATE, TST, BIDU)

Paul Ausick — Tue, 29 Nov 2011 18:43:45 +0000

Over the past month, a number of internet stocks have received new target prices from analysts. We’ve seen five targets rise: Google Inc. (NASDAQ: GOOG), LinkedIn Corp. (NASDAQ: LNKD), AOL Inc. (NYSE: AOL), Baidu Inc. (NASDAQ: BIDU), and Bankrate Inc. (NASDAQ: RATE). Two have seen target prices drop: Demand Media, Inc. (NYSE: DMD) and Monster Worldwide Inc. (NYSE: MWW). Two others that we keep an eye on, Yahoo Inc. (NASDAQ: YHOO) and TheStreet Inc. (NASDAQ: TST) have remain unchanged.

It’s no surprise that Yahoo’s target price hasn’t changed, given the maelstrom surrounding the company and its bevy of potential suitors. TheStreet’s dividend yield, currently 6.3%, virtually guarantees investor satisfaction, even though the share price is down more than -9% in the past month.

Among those with higher target prices, Google’s median target price rose to $730.00, up just slightly from its previous level of $727.50, and LinkedIn’s median target price rose $4.00, from $88.00 to $92.00. In the past month, Google’s share price is off less than -1%, while LinkedIn’s has fallen -35%. The potential upside on Google stock is 25.1% and the potential upside on LinkedIn is 59.8%.

LinkedIn’s share price suffered from the end of the lock-up period that prevented insiders from selling shares. Another batch of locked up shares are due to be released in February, and there won’t be much improvement in LinkedIn’s share price until that date is passed.

AOL’s median target price has risen $1.00, from $17.00 to $18.00, and Baidu’s target has gone up from $191.00 to $192.40. Current share prices for both are lower compared with a month ago, and the implied upside on AOL stock is 30.3% while the implied upside on Baidu is 52.9%. Bankrate’s target has risen from $21.50 to $22.00, and its share price is also up more than 9% in the past month. The potential upside on Bankrate shares is 21.2%.

Demand Media’s median target price fell from $15.00 to $12.00, although its current share price is 7.7% higher than a month ago. The potential upside in Demand Media’s shares is 72.7%. Monster Worldwide’s target price fell from $15.00 to $11.75, and its current share price is -22.1% lower than it was a month ago. The potential upside at Monster is 69.1%.

With the exception of TheStreet, none of these companies pays a dividend.

We explained a while ago why we think that Baidu is a better play than Google or even Apple Inc. (NASDAQ: AAPL), and nothing but a few decimal points have changed since then. The company’s potential more than justifies its high upside.

Paul Ausick

Filed under: Analyst Calls, Internet, Value Investing Tagged: AOL, BIDU, DMD, GOOG, LNKD, MWW, RATE, TST, YHOO

Americans Feeling Less & Less Financially Secure (RATE)

Paul Ausick — Mon, 31 Oct 2011 15:38:06 +0000

A mere 17% of Americans believe that their overall financial situation is better now than it was a year ago. Only 19% say their net worth is higher today than it was 12 months ago. Just 11% are more comfortable with their savings.These are just a few of the results from a recent surveyconducted by Bankrate, Inc. (NYSE: RATE). The only surprise in the survey may be that 75% of Americans feel as or more secure about their jobs than they did a year ago. But the pre-holiday layoff season is now upon us and recent job cut announcements might have changed that survey outcome if the survey were to be conducted at the end of this month.Feelings of financial security depend on a growing economy, a robust housing market, and some stability in the equity markets. All have gone missing, and until they return in force, Americans will continue to feel less secure.

Most recent projections for US economic growth are at or below 2%, a level that barely indicates a pulse. There have been some signs of improvement in the housing market, but lower home prices have taken their toll on consumers’ psyches. Stocks had a very good month (so far) in October, but there is little reason to believe that volatility will subside soon.

The job security felt by 75% of Americans is very likely the result of having a job at all. As a measure of the US economy, that’s damning with faint praise.

Paul Ausick

Filed under: Compensation, Consumer Goods, Economy, Retail Tagged: RATE

Expected Price Gains for Internet Stocks (GOOG, YHOO, AOL, BIDU, DMD, LNKD, MWW, RATE, TST)

Paul Ausick — Tue, 25 Oct 2011 18:54:08 +0000

As the internet has developed over the past 15 years or so, a variety of business models have appeared — and some have disappeared. Revenue models are also different, running from advertising to subscription to content provider types. The dominant revenue model is advertising and the leaders there are Yahoo! (NASDAQ: YHOO) in display advertising and Google (NASDAQ: GOOG). AOL (NYSE: AOL) and China’s Baidu (NASDAQ: BIDU) are other major ad driven sites.

LinkedIn (NASDAQ: LNKD) and Monster World Wide (NYSE: MWW) depend on subscriptions for revenue, while Demand Media (NYSE: DMD), Bankrate (NYSE: RATE) and TheStreet (NASDAQ: TST) provide original content surrounded by advertising. In addition to these publicly traded stocks, the internet space also includes social networking company Facebook, social game company Zynga and coupon site Groupon. The latter two have filed for IPOs and both are expected to come public as soon as next month. All the following financial data comes from Yahoo! Finance, unless noted otherwise.

Google has a median target price of $727.50 from 30 brokers. Shortly after noon today, shares are trading at $587.87, for an implied gain of $139.63, or 24%. Google’s forward P/E is 13.45 and the company does not pay a dividend. The stock’s 52-week trading range is $473.02 to 642.96, and at today’s price that is about 24% above its 52-week low, posted earlier this morning, and 9% below the 52-week high. Google reaps nearly $10 billion a quarter in advertising revenues. Only a relatively small portion of that is mobile advertising, but as Google’s best-selling Android mobile operating system continues to spread, the mobile ad revenue could continue its triple-digit growth rate for some time to come.

Yahoo! has a median target price of $18.00 from 23 brokers. Shortly after noon, shares are trading today at $16.33, for an implied gain of $1.67, or 10%. Yahoo!’s forward P/E is 18.55 and the company does not pay a dividend. The stock’s 52-week trading range is $11.09 to $18.84, and at today’s price that is about 47% above its 52-week low, posted earlier this morning, and 13% below the 52-week high. Yahoo! recently fired its CEO and is currently exploring strategic options. Much of the company’s value resides in its nearly 40% share in China’s Alibaba e-commerce site. The stock price is relatively high on the belief that the company will find a buyer willing to pay a premium.

AOL has a median target price of $17.00 from 15 brokers. Shortly after noon today, shares are trading at $14.38, for an implied gain of $2.62, or 18%. AOL’s forward P/E is 84.65 and the company does not pay a dividend. The stock’s 52-week trading range is $10.06 to $27.65, and at today’s price that is about 43% above its 52-week low, posted earlier this morning, and 48% below the 52-week high. AOL recently purchased the Huffington Post properties, which gave the company something of a boost. The high forward P/E speaks volumes about prospects for future earnings. AOL, like Yahoo!, probably is overpriced.

Baidu has a median target price of $191.00 from 26 brokers. Shortly after noon, shares are trading today at $127.89, for an implied gain of $63.11, or 49%. Baidu’s forward P/E is 29.11 and the company does not pay a dividend. The stock’s 52-week trading range is $94.33 to $165.96, and at today’s price that is about 36% above its 52-week low, posted earlier this morning, and 23% below the 52-week high. Baidu’s great advantage is that it is the largest and fastest growing internet company in the world’s most populous country. Sheer numbers are on Baidu’s side for now and for several years to come. The forward P/E may indicate an overpriced stock, but its stock price is still nearly $35 per share below its target price. There’s plenty of room for this one to run.

Demand Media has a median target price of $15.00 from 10 brokers. Shortly after noon today, shares are trading at $6.47, for an implied gain of $8.53, or 132%. Demand Media’s forward P/E is 16.97 and the company does not pay a dividend. The stock’s 52-week trading range is $5.24 to $27.38, and at today’s price that is about 23% above its 52-week low, posted earlier this morning, and 76% below the 52-week high. Demand Media was hit hard by a change earlier this year to Google’s search algorithm and the company has not recovered. The target price here is too high, and the company continues its arguable accounting practice of capitalizing content creation costs and amortizing them over five years. The effect of that practice is to spread costs over a long period, making the company look more profitable than it may be.

Filed under: Analyst Calls, Internet Tagged: AOL, BIDU, DMD, GOOG, LNKD, MWW, RATE, TST, YHOO

Top Analyst Upgrades & Downgrades (RATE, BWLD, DLLR, DLTR, TV, HA, IGT, JNPR, LVS, LNKD, MPEL, NOV, PCX, PM, SBGI, SBUX)

Administrator — Wed, 27 Jul 2011 12:25:13 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Wednesday morning.

Bankrate Inc. (NYSE: RATE) Started as Buy at Citigroup; Started as buy at Stifel Nicolaus; Started as Outperform at RBC.
Buffalo Wild Wings Inc. (NASDAQ: BWLD) Raised to Outperform at Raymond James.
Dollar Financial (NASDAQ: DLLR) Reiterated Buy as Bull of the Day at Zacks.
Dollar Tree, Inc. (NASDAQ: DLTR) Raised to Overweight at Piper Jaffray.
Grupo Televisa S.A. (NYSE: TV) Cut to Underperform as Bear of the Day at Zacks.
Hawaiian Holdings, Inc. (NASDAQ: HA) Raised to Neutral at BofA/ML.
International Game Technology (NYSE: IGT) Reiterated Outperform but raised target to $24 at Credit Suisse.
Juniper Networks, Inc. (NYSE: JNPR) removed from Conviction Buy List at Goldman Sachs; also downgraded at William Blair, Oppenheimer, and Citigroup.
Las Vegas Sands (NYSE: LVS) Reiterated Outperform and raised target to $60 from Credit Suisse.
LinkedIn Corporation (NYSE: LNKD) Started as Market Perform at William Blair.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Reiterated Buy and raised target to $19.10 at Citigroup.
National Oilwell Varco (NYSE: NOV) Reiterated Buy and raised target to $100 at Canaccord Genuity.
Patriot Coal Corporation (NYSE: PCX) Removed from Conviction Buy List at Goldman Sachs.
Phillip Morris International Inc. (NYSE: PM) Reiterated Buy and raised target to $80 at Argus.
Sinclair Broadcast Group Inc. (NASDAQ: SBGI) Cut to Neutral at JPMorgan.
Starbucks Corporation (NASDAQ: SBUX) Raised to Buy at Janney Capital.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: BWLD, DLLR, DLTR, HA, IGT, JNPR, LNKD, LVS, MPEL, NOV, PCX, PM, RATE, SBGI, SBUX, TV

Key IPOs For The Week: Stewart & Stevenson, Vanguard Health, KiOR (SNS, VHS, KIOR, RATE, P)

Administrator — Mon, 20 Jun 2011 13:58:43 +0000

The market for initial public offerings is one which is a bit on the ropes. Sketchy offerings from China, a soft market, and the news coming from Europe is all contributing to some caution. Let’s go ahead and throw in the summer doldrums as well. This week we do have three key IPOs which we will be watching. Stewart & Stevenson Inc. (NYSE: SNS), Vanguard Health Systems, Inc. (NYSE: VHS), and KiOR Inc. (NASDAQ: KIOR) are all tentatively on our schedule. The terms and dates can all be subject to change and there are no assurances that these deals will make it to market.

Bankrate Inc. (NYSE: RATE) got off to a rough start last week after we thought the pricing was fair for the most part but that now looks to have normalized, yet Pandora Media, Inc. (NYSE: P) did some added damage after gapping up way too high after doubling its planned capital raise.

Stewart & Stevenson Inc. (NYSE: SNS), the prominent supplier of equipment to oil field operations, has announced a public offering of 16 million shares in order to raise $240 million. The offering is expected to price Tuesday, June 22, 2011 in the $14 to $16 range. The principal underwriters are J. P. Morgan, Goldman Sachs and Citigroup.

Vanguard Health Systems, Inc. (NYSE: VHS), a hospital operator with 26 acute care and specialty hospitals in five states, has filed an initial public offering to sell 25 million shares. Vanguard aims to raise $600 million. The offering is expected to price Wednesday, June 23, 2011 in the $21 to $23 range. The Blackstone Group owns controlling in the hospital operator. The lead underwriters are Merrill Lynch, Barclays, Citigroup, Deutsche Bank and J. P. Morgan.

KiOR Inc. (NASDAQ: KIOR), a biocrude start-up in Pasadena, Texas, announced it has filed an IPO to sell 10 million common shares with the objective of raising $100. Kior is the latest Khosla Ventures-backed biofuel company to seek the support of the public markets. The shares are expected to price Thursday, June 24, 2011 in the $19 to $21 range. The offering lists Credit Suisse, UBS and Goldman Sachs and the principal underwriters.

We are now hearing that Angie’s List is even up for an IPO filing very soon. None of these were part of our own Top 17 IPOs to Watch for 2011.

Our biggest problem is not the IPO market itself. We just have an issue over how the underwriters are currently willing to allow overly hyped companies to command far too high of valuations that are not sustainable if you remove the small-float premium or if you just evaluate these businesses on historic levels.

JON C. OGG

Filed under: Calendar, IPOs Tagged: KIOR, P, RATE, SNS, VHS

Bankrate Re-IPO, Price Looks Mostly Fair (RATE)

Administrator — Fri, 17 Jun 2011 13:40:00 +0000

Bankrate, Inc. (NYSE: RATE) is public again. The company priced its 20 million share IPO at $15.00 per share. This was right in the middle of the expected price range of $14 to $16 per share. If Bankrate sounds familiar, it should. The online personal finance content maker was taken private by affiliates of Apax Partners in 2009 so this is another re-IPO.

The company itself is offering 12,500,000 of the shares in the offering and the existing shareholders are offering an additional 7,500,000 shares. For a fully diluted count the prospectus uses 100 million shares, generating a diluted market cap of close to $1.4 to $1.6 billion based upon the offering price.

The company’s personal finance categories cover mortgages, deposits, insurance, credit cards, retirement, auto loans, and taxes. The website also aggregates information about rates from over 4,800 institutions on more than 300 financial products, with coverage of nearly 600 local markets in all 50 U.S. states. The company boasts some 172,000+ distinct rate tables capturing on average over three million pieces of information daily. The site claimed over 150 million visits in 2010. The company’s editorial staff includes 33 editors and reporters, 90 freelancers and 15 expert columnists which generate more than 150 new articles per week on top of over 50,000 stories in its database.

Affiliates of Apax Partners, L.P. own about 90% of the company. The underwriting syndicate is rather large: Goldman Sachs, BofA Merrill Lynch, Citi, J.P. Morgan, Allen & Company, Credit Suisse, Stephens Inc., RBC Capital Markets, and Stifel Nicolaus Weisel.

After 10 years as a previous public company, Bankrate was acquired on August 25, 2009 by Apax’s Ben Holding. The company has also executed several acquisitions and two are NetQuote Holdings and CreditCards.com. As far as how this ties into the Apax value, Apax advises or manages more than $35.0 billion directly or indirectly. While the acquisitions will throw a wrench in the machine on estimating the carry-cost, it should be known that Apax paid roughly $571 million for Bankrate back in 2009.

Our take: the pricing and terms here look mostly fair as the order book was said to be mostly in-line with expectations. By not having a super-premium and by not having a large discount, it is easier to evaluate this one.

UPDATE: At 9:59 AM EST we have shares trading at $14.21 and we have an official opening price of $14.00.

JON C. OGG

Filed under: Banking, Financial Stocks, Internet, IPOs, Personal Finance, Private Equity Tagged: RATE

Apax Set to Clean House in Bankrate IPO… The Private Equity Flip (RATE)

Administrator — Mon, 06 Jun 2011 19:17:59 +0000

Bankrate, Inc. is about to be public again. This online personal finance content maker was taken private by affiliates of Apax Partners. The terms of the initial public offering are currently for some 20 million shares with a price range of $14.00 to $16.00 per share. The company itself is offering 12,500,000 of the shares in the offering and the existing shareholders are offering an additional 7,500,000 shares. For a fully diluted count the prospectus uses 100 million shares, generating a diluted market cap of close to $1.4 to $1.6 billion based upon the offering price. The company plans to list shares on the New York Stock Exchange under the symbol “RATE.”

The company will enter into revolving credit facilities of up to $105 million around the time of the closing of the offering. Affiliates of Apax Partners, L.P. own about 90% of the company. The underwriting group is massive considering the size: Goldman Sachs, BofA Merrill Lynch, Citi, J.P. Morgan, Allen & Company, Credit Suisse, Stephens Inc., RBC Capital Markets, and Stifel Nicolaus Weisel.

Bankrate probably sounds familiar as a public company. After 10 years as a previous public company, Bankrate was acquired on August 25, 2009 by Apax’s Ben Holding. Since then, it has executed several acquisitions and two are NetQuote Holdings and CreditCards.com. As far as how this ties into the Apax value, Apax advises or manages more than $35.0 billion directly or indirectly. While the acquisitions will throw a wrench in the machine on estimating the carry-cost, it should be known that Apax paid roughly $571 million for Bankrate back in 2009.

There is a difference between OldCo and NewCo for revenues and earnings. Those can be seen in the financial section of Bankrate’s full IPO amended filing.

JON C. OGG

Filed under: Internet, IPOs, Personal Finance Tagged: RATE

Top 10 Analyst Upgrades and Downgrades (ARIA, RATE, IRM, ISLN, MOT, OMX, RTP, SYNA, VSEA, DIS)

247wallst — Fri, 31 Jul 2009 12:07:14 +0000

These are ten of the top pre-market analyst calls with upgrads and downgrades that we have seen from Wall Street early this Friday morning:

Ariad pharmaceuticals (ARIA) Cut to Sell at Merriman Curhan Ford.
Bankrate (RATE) Cut to Hold at Jefferies.
Iron Mountain (IRM) Cut to Neutral at Baird.
Isilon Systems (ISLN) Raised to Buy at ThinkEquity; Raised to Buy at Needham.
Motorola (MOT) Raised to Outperform at Morgan Keegan.
OfficeMax (OMX) Raised to Buy at Citigroup.
Rio Tinto (RTP) Cut to Neutral at Credit Suisse.
Synaptics (SYNA) Cut to Hold at Jefferies.
Varian Semiconductor (VSEA) Raised to Buy at UBS.
Walt Disney (DIS) Cut to Underweight at JPMorgan.

Jon C. Ogg
July 31, 2009

Posted in Analyst Calls Tagged: ARIA, DIS, IRM, ISLN, MOT, OMX, RATE, RTP, SYNA, VSEA

Top Analyst Downgrades (ASTI, RATE, CHL, JNPR, MTL, SNP, TOT)

247wallst — Tue, 02 Jun 2009 11:33:12 +0000

These are the top pre-market analyst downgrades and cautious research calls we have seen from Wall Street early this Tuesday morning:

Ascent Solar (ASTI) Cut to Neutral at Merriman Curhan Ford.
Bankrate (RATE) Cut to Hold at Citigroup.
China Mobile (CHL) Removed from Conviction Buy List at Goldman Sachs.
Juniper Networks (JNPR) Cut to Neutral at UBS.
Mechel (MTL) Cut to Equal Weight at Morgan Stanley.
Sinopec (SNP) Removed from Conviction Buy List at Goldman Sachs.
Total (TOT) Cut to Hold at Citigroup.

JON C. OGG

Posted in Analyst Calls Tagged: ASTI, CHL, JNPR, MTL, RATE, SNP, TOT

Top 10 Analyst Upgrades & Downgrades (ADBE, RATE, BWA, MRO, RHT, SEPR, SYMC, SINA)

247wallst — Mon, 04 May 2009 11:35:24 +0000

Monday is starting the week off with a pretty light wave of analyst calls. The top 10 analyst upgrades and downgrades are not even a full 10 calls with more than two hours until the market opens:

Adobe Systems (ADBE) Cut to Hold at Citigroup; Cut to Neutral at UBS.
Bankrate (RATE) Cut to Market Perform at JMP Securities.
BorgWarner Inc. (BWA) Cut to Equal Weight at Barclays.
Marathon Oil (MRO) Cut to Neutral at Credit Suisse.
Red Hat (RHT) Raised to Buy at UBS.
Sepracor (SEPR) Raised to Overweight at JPMorgan.
Symantec (SYMC) Raised to Overweight at Thomas Weisel.
Sina Corp. (SINA) Cut to Perform at Oppenheimer.

JON C. OGG

Posted in Analyst Calls Tagged: ADBE, BWA, MRO, RATE, RHT, SEPR, SINA, SYMC