NEW YORK (TheStreet) -- Shares of SINA Corp. (SINA) are down -3.22% to $46.60 in pre-market trade after Oppenheimer downgraded the stock to "perform" from "outperform" and removed its $90 price target.
The firm noted that the company's Internet Publication License and License for Online Transmission of Audio-Visual Programs would be revoked due to "certain unhealthy and indecent content on book.sina.com.cn and www.sina.com.cn, according to notices from the State Administration of Press, Publication, Radio, Film and Television."
In addition, their note continued, "it is subject to an $815,000 penalty. We understand there are still many uncertainties regarding what it can/can't do going forward, but do expect business disruption in the coming quarters. After taking into consideration the potential revenue loss from online video/reading advertisement, and associated headline risks, our sum-of-the-parts (SOTP) valuation implies limited upside over SINA's current price."
TheStreet Ratings team rates SINA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:"We rate SINA CORP (SINA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 20.6%. Since the same quarter one year prior, revenues rose by 41.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SINA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SINA CORP increased its bottom line by earning $0.59 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($1.48 versus $0.59).
- SINA's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.28 is very high and demonstrates very strong liquidity.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, SINA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- SINA has underperformed the S&P 500 Index, declining 13.70% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: SINA Ratings Report
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