CHICAGO, May 16, 2011 /PRNewswire/ -- Zacks Equity Research highlights: j2 Global Communications (Nasdaq: JCOM) as the Bull of the Day and PetMed Express (Nasdaq: PETS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on SINA Corp. (Nasdaq: SINA), Baidu Inc. (Nasdaq: BIDU) and Sohu.Com Inc. (Nasdaq: SOHU).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We upgrade our recommendation on j2 Global Communications (Nasdaq: JCOM) to Outperform. We believe j2 Global's strong financial position and diversified product pipeline, coupled with the future growth prospects of outsourced value-added messaging services, will drive its valuation levels higher in the near future.
The Subscriber Usage revenue continues to beat market expectations. This is an important parameter as credit-sensitive customers constitute a majority of the company's sales. Exploration of new opportunities for both digital facsimile and voice services, through continuous acquisitions, facilitated the company to solidify its market position.
j2 Global has achieved a huge reduction in its cancel rate in the last two quarters. Acquisition of Protus IP Solutions significantly boosted j2 Global s paid Dial in Demand numbers. Full-year 2011 financial outlook provided by management is also very strong.
PetMed Express (Nasdaq: PETS) reported a disappointing quarter with EPS of $0.19 missing the Zacks Consensus Estimate of $0.22 and the year-ago quarter's $0.27. Both gross and operating margins declined due to higher product and advertising costs -- a big blow for the company as it depends on advertising to increase its customer base.
Moreover, economic uncertainty is taking a toll on the company, forcing consumers to switch to cheaper alternatives. We do no expect the situation to improve significantly in the near future. We maintain our Underperform recommendation on the stock.
Over the last five years, the company's shares have traded in a range of 13.7X to 24.8X trailing 12-month earnings. Our target price of $12.00 per share is based on 14.5X our 2012 EPS estimate of $0.83.
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SINA Misses on Higher Expenses
SINA Corp. (Nasdaq: SINA) reported first quarter 2011 earnings of 21 cents per share, which missed the Zacks Consensus Estimate by 2 cents. Earnings exclude one-time items but include stock-based compensation charges.
Earnings per share decreased 25.0% year over year, due to increased marketing and engineering expenses related to Weibo and video initiatives.
Guidance
SINA expects non-GAAP net revenue for the second quarter of 2011 of between $112.0 million and $115.0 million.
Non-GAAP advertising revenue is expected to be in the range of $90 million and $92 million, while non-GAAP non-advertising revenue is expected in the range of $22 million to $23 million.
Recommendation
SINA remains a premier company due to its strong product pipeline, continuous investment in product development and marketing and a robust user base for its E-Commerce and Weibo offerings.
SINA's online advertising business has a competitive edge based on its popularity in China, superior brand recognition and persistent marketing innovations.
However, weak non-advertising revenue growth is expected to hamper top-line growth going forward. Moreover, increasing competition from Baidu Inc. (Nasdaq: BIDU) and Sohu.Com Inc. (Nasdaq: SOHU) will hurt profitability over the long term.
We maintain our Neutral recommendation over the long term. Currently, SINA has a Zacks #5 Rank, which implies a Strong Sell rating over the short term.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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