SouFun (SFUN) Stock Down Ahead of Q1 Results

NEW YORK (TheStreet) -- Shares of SouFun Holdings (SFUN) are slumping by 1.83% to $5.36 late Tuesday morning, as the company prepares to report its 2016 first quarter results before Thursday's opening bell.

Wall Street is expecting the Beijing-based real estate Internet portal to post a loss of 10 cents per ADS on revenue of $189.2 million.

During the same quarter last year, SouFun earned a penny per ADS on revenue of $123.5 million.

Nomura lowered its price target on the stock to $7.96 from $8.68 earlier today ahead of the results.

"We expect strong revenue of $194 million...due to strong direct sales business, but a net loss of $68 million due to higher-than-expected secondary direct sales (currently still a loss making business)," the firm wrote in a note to investors.

Nomura does not expect earnings to turn around until the 2016 fiscal fourth quarter.

"Management may consider increasing the commission rate, and they expect 1.2%-1.5% commission rate is the earnings break-even point. We believe this commission increase may boost 4Q16F earnings, but it depends whether efficiency is compromised," the firm added.

Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.

The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its robust revenue growth and largely solid financial position with reasonable debt levels by most measures.

However, the team also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: SFUN

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