According to Laureate BVI, Sina Corp is currently oversold on a technical basis and upgrade the stock to a strong buy with a 12-month target price of US$90.
Beverly Hills, CA -- (SBWIRE) -- 04/16/2014 -- Laureate BVI reduced its value for the Weibo IPO which will launch on April 17, with Goldman Sachs and Credit Suisse serving as lead underwriters. Weibo’s IPO should come in between US$3.5 billion to US$4 billion based on initial pricing of the shares.
Laureate reports, shares of Sina (NASDAQ: SINA) the parent company of Weibo are currently trading at US$52.77. Sina (SINA) has a 1-year low of US$45.54 and a 1-year high of US$92.83. The stock’s 50-day moving average is US$69.76 and its 200-day moving average is US$78.75.
Laureate BVI CEO Peter Tasca states, “On a technical basis Sina Corp (SINA) is oversold, the company after the sale of Weibo is still profitable with its other properties, I see the current sell-off as a buy opportunity”.
Sina reported fourth-quarter 2013 profits of 39 cents per share which beat Zacks Consensus Estimate of 44 cents per share. Revenues increased 7.0% yoy to US$192.3 million, however Zacks Consensus Estimate was for US$197.0 million.
“It’s important to note that US$71.4 million of the US$192.3 million of Sina Corp’s earnings came from Weibo, it’s microblogging property,” according to Tasca.
Tasca further states, "If you break down Weibo’s US$71.4 million in earnings you see explosive growth this asset. It’s ad revenue increased 163% yoy to US$56 million and its non-ad revenue grew 114% to US$15.4 million, this division is worth more than its parent company Sina.”
Laureate reports the reason Sina Corp.’s stock price has nearly dropped to its 1-yr low is due to increased competition from Tencent’s WeChat, and that worries the investment community.
Tasca states, “The investors that are afraid of WeChat do not understand the platforms they are comparing. The competition between Weibo and WeChat is different, one service is catered to close friends and family while Weibo allows for one person to follow hundreds or even thousands of people, thus allowing corporate users to distribute ads. Also, Weibo is very profitable and we see Sina Corp which has other profitable social platforms as an opportunity to participate indirectly with the IPO while distributing the risk of a single asset company”.
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