SouFun (SFUN) Stock Falls After Deutsche Bank Downgrade

NEW YORK (TheStreet) -- Shares of SouFun (SFUN) were falling 5.7% to $7.60 Tuesday after Deutsche Bank downgraded the Chinese online real estate portal to "hold" from "buy."

The analyst firm also lowered its price target for the company to $7.20 from $9.50.

Deutsche Bank analyst Vivian Hao believes SouFun is still caught up in its business model transition despite arguably looming macro tailwinds and a moderate rebound in property market transaction volumes in China.

Hao wrote, "As a result of its new strategy, we expect the company's margins to dramatically deteriorate (our est.: non-GAAP OPM at 8% FY15E vs. consensus at 32%) owing to: 1) major hiring of sales force to beef up its transaction-driven business arm; and 2) revenue-cost mismatch. We believe the recent share rally is unwarranted given transitional uncertainties and the potentially compromised longer term margin outlook."

Separately, TheStreet Ratings team rates SOUFUN HLDGS LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOUFUN HLDGS LTD (SFUN) 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 revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

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