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TheStreet Open House

Why Qihoo 360 (QIHU) Stock Is Down Today

NEW YORK (TheStreet) -- Qihoo 360 Technology (QIHU) was falling -2% to $91.98 Tuesday after Credit Suisse downgraded the company to "neutral."

The analyst firm cited weak mobile search traffic and competition as reasons for the downgrade.

Credit Suisse's downgrade comes a day after Qihoo 360 reported low margins in its second quarter results.

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

"We rate QIHOO 360 TECHNOLGY CO -ADR (QIHU) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

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

  • QIHU's very impressive revenue growth greatly exceeded the industry average of 19.9%. Since the same quarter one year prior, revenues leaped by 141.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QIHOO 360 TECHNOLGY CO -ADR 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. 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 ($2.51 versus $0.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 784.9% when compared to the same quarter one year prior, rising from $5.55 million to $49.12 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, QIHOO 360 TECHNOLGY CO -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 459.59% to $100.46 million when compared to the same quarter last year. In addition, QIHOO 360 TECHNOLGY CO -ADR has also vastly surpassed the industry average cash flow growth rate of 17.71%.
  • 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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