By Jordan Faigen
On May 27, Qihoo 360 Technology Co Ltd (NYSE:QIHU) reported impressive first quarter earnings that blew away Street expectations.
Qihoo in the News
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The software company, known best for its antivirus software, web browser, and mobile application store, revealed a 141.3% increase in first quarter revenue, from $109.9 million last year, to $265.1 million this year. In addition, total monthly active users of the company’s PC products increased from 457 million to 479 million year-over-year, hitting a new record high in March. Chairman and Chief Executive Officer of Qihoo noted, “we are pleased to report another quarter of strong growth and solid operational metrics.” He added, “while we maintained our leadership position in key PC-related product categories, we continued to make significant progress in the ever more-important mobile Internet market.”
An Analyst Perspective
Following the release of Qihoo 360 Technology Co Ltd (NYSE:QIHU)’s impressive quarterly numbers, Stifel Nicolaus analyst George Askew, maintained his BUY Qihoo rating with a price target of $168. Askew and his team noted that Qihoo happens to be in the middle of two “fast growing, billion-dollar product cycles: search and mobile games.” Askew and his fellow analysts are also impressed with the large scale of users, and pointed out the company could “quickly monetize product cycles,” based on these users. Based on his seven Qihoo recommendations, Askew has earned a +35.4% average return recommending the stock.
George Askew’s Past Recommendations
In addition to his strong Qihoo 360 Technology Co Ltd (NYSE:QIHU) recommendations, Askew has also seen solid returns recommending other Chinese stocks such as, Sina Corp. (SINA) and CTrip.com (CTRP).
These recommendations have helped him earn an overall average return of +15.5% per recommendation and a 59% success rate of recommendations.
In August of 2013, Askew reiterated his BUY rating for Qihoo and raised his price target from $55.00 to $100.00. Following a successful Q2 report, Askew noted, “he remarkably strong growth continues at Qihoo as the company soundly beat 2Q13 estimates with revenue growth of 108% year-over-year and adjusted EBITDA growth of 142% year-over-year. The rapid growth included online advertising up 78% and Internet value-added services (mostly web and mobile game platforms) up 181%.” This recommendation earned Askew 10%.
In addition to Qihoo, Askew has also earned a high average return recommending Chinese online media company, SINA Corp (NASDAQ:SINA). On November 16, 2012, Askew maintained his BUY rating after third-quarter earnings revealed a growth in sales. Askew noted that Weibo, one of the most valuable pieces of Sina’s business, is the “most important new media property in China today.” Based on Askew’s four recommendations, he has earned a +18.3% average return on the stock.
Askew has also seen success with Chinese company, Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), a China-focused travel agency. In August of last year, Askew recommended BUY Ctrip as travel trends rose. Askew noted, “The online travel industry and travel in general is in its infancy in China compared to the rest of the world. Ctrip is positioned to benefit from this growth as incomes rise and people travel more.” He added, “We believe the combination of mobile innovation, a renewed focus on distribution, and an industry tailwind in China with air passenger enplanements at a ten-quarter high support further appreciation in the shares.” This recommendation earned him XX%. This recommendation, in addition to his two other recommendations, Askew has earned a +14.2% average return on the stock.
However, Askew has not seen success with every Chinese stock recommendation. In February of this year, Askew upgraded Chinese web services company, Baidu Inc (ADR) (NASDAQ:BIDU), to a BUY rating after revealing fourth-quarter results. Askew argued, “our upgrade is based on Baidu’s very rapidly growing mobile search franchise. We believe Baidu is building the dominant franchise in mobile search in China, which we now view as a separate business from desktop search. Virtually all search query growth in China is coming from mobile we believe, and Baidu is capturing the majority.” However, the stock has dropped since this recommendation, leaving Askew with a -3.1% average return on the stock.
Chinese stocks can be risky, however, Askew has seen some major success recommending these influential companies. Will you be taking your portfolio internationally with Askew’s advice?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]