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Why Qihoo 360 (QIHU) Stock Is Up Today

NEW YORK (TheStreet) -- Qihoo 360 (QIHU) was gaining 6.1% to $95.49 Wednesday after beating analysts' estimates for earnings and revenue in the first quarter.

For the first quarter Qihoo 360 reported earnings of 54 cents a share, beating the Capital IQ Consensus Estimate of 34 cents a share by 20 cents. Revenue grew 141.3% from the year-ago quarter to $265.1 million. Analysts expected revenue of $228.2 million for the quarter.

Looking forward to the second quarter Qihoo 360 expects revenue of $300 million to $305 million, above analysts' estimates of $270.18 million for the quarter.

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TheStreet Ratings team rates QIHOO 360 TECHNOLGY CO -ADR as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate QIHOO 360 TECHNOLGY CO -ADR (QIHU) 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, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • QIHU's very impressive revenue growth greatly exceeded the industry average of 21.3%. Since the same quarter one year prior, revenues leaped by 115.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QIHOO 360 TECHNOLGY CO -ADR has improved earnings per share by 9.1% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QIHOO 360 TECHNOLGY CO -ADR increased its bottom line by earning $0.76 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($2.52 versus $0.76).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 103.67% over the past year, a rise that has exceeded that of the S&P 500 Index. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, QIHOO 360 TECHNOLGY CO -ADR's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: QIHU Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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