Brean Capital Slashes Price Target for Youku Tudou Inc (ADR) as Margin Pressure Becomes More Clear

In a research report published Friday, Brean Capital analyst Fawne Jiang reiterated a Buy rating on the leading chinese online TV company Youku Tudou Inc (ADR) (NYSE:YOKU), but reduced the price target to $20 (from $24), after the company reported mixed fourth-quarter results and provided solid first-quarter revenue guidance. 

Jiang wrote, "Management expects top-line growth to reaccelerate in 2015 driven by both brand ad and consumer businesses. We are positive on the growth momentum of the company as YOKU continues to transform its business model, targeting multi-screen, building a content ecosystem and seeking diversified revenue models. The recent partnership with Alibaba could help the company to expand its user base, thereby improving content production and exploring new revenue streams."

However, "We believe the online video industry will remain highly competitive in the near term as key players aggressively race for market share and YOKU will likely continue to face margin pressure in 2015 upon stepped-up investment. As such, we maintain our Buy rating on YOKU stock, but lower our TP to $20 (from $24), reflecting increasing costs upon investment."

According to, which measures analysts' and bloggers' success rate based on how their calls perform, analyst Fawne Jiang has a total average return of -5.7% and a 32.8% success rate. Jiang has a -23.1% average return when recommending YOKU, and is ranked #3355 out of 3535 analysts.


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