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On Tuesday, Jefferies analyst Thomas Chong increased the price target for Sohu.com (NASDAQ:SOHU) to $17.00, up from the previous $16.50, while reiterating a Buy rating on the stock. The adjustment follows Sohu's fourth quarter earnings report, which presented brand advertising revenue at the higher end of the company's guidance and online game revenues that surpassed expectations. According to InvestingPro data, the company has demonstrated strong momentum with a 53.6% return over the past year and maintains impressive gross profit margins of 75.2%.
Sohu.com's non-GAAP earnings for the fourth quarter also exceeded Jefferies' estimates. Looking ahead, the company's guidance for non-GAAP earnings in the first quarter of 2025 is more optimistic than Jefferies had predicted. Despite potential macroeconomic uncertainties, which management has factored into their first-quarter brand advertising guidance, Sohu.com is expected to continue its investment in user growth and the enhancement of social distribution features. InvestingPro analysis shows the company maintains a healthy financial position with a current ratio of 3.31, indicating strong liquidity to support its growth initiatives.
The analyst's commentary included expectations for Sohu's gaming segment, anticipating the release of new games in the second half of the year. The company's strategic focus on game releases is seen as a positive move to drive future revenue growth.
The updated price target suggests confidence in Sohu.com's growth trajectory, backed by its recent performance and forward-looking strategies. The company's ability to exceed revenue and earnings expectations, coupled with prudent guidance that accounts for external economic factors, supports the analyst's maintained Buy rating.
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