Calls of Note Part 4

Two firms out positive on Focus Media (NASDAQ:FMCN) ahead of 4Q results.

- Citigroup says they expect Focus to beat they US$67.6m rev and US$0.62 non-GAAP EPADS 4Q estimates when it reports on February 26. Guidance for FY07 should at least be in-line with the Street, and at least in-line with their new 1Q estimates. Firm reiterates their TP of US$100, which represents 28x our new ?08E non-GAAP EPADS of US$3.59.

While it is well known that the Commercial Location Network (60% of total revs) is shut-down for two weeks in 1Q due to CNY, last year, because the Target Media acquisition closed in late February, the qoq seasonality was significantly muted. To be conservative for 1Q07, firm lowers their estimates to US$57.0m and non-GAAP EPADS to US$0.42.

Despite trimming 1Q for seasonality and the 1.5m share dilution, firm has increased their 2Q-4Q07 estimates to reflect the strong demand environment and greater operating leverage assumptions than previously. As a result, their '07E remain unchanged at US$354m and US$2.75.

- CIBC expects Focus Media to report solid 4Q:06 results on 2/26 after the close, likely exceeding consensus and the company's guidance due to strong seasonality. Firm forecasts total revenues of $68.8M and non-GAAP EPS of $0.63, (vs. consensus of $68.5M and $0.62).

While they are hearing concerns that 1Q guidance may be weaker than expected due to seasonality, firm believes the company will provide FY guidance in line with Street estimates, making the 1Q forecasting exercise less meaningful. Based on strong pricing trends and higher margin assumptions, firm is increasing their '07 and '08 GAAP EPS estimates to $2.40 and $3.08, reflecting y/y growth of 53% and 28%, and our non-GAAP estimates to $2.68 and $3.40 (vs. consensus of $2.64 and $3.49).

Price tgt is raised to $100 from $76.

Notablecalls: Expect to see some buy interest today.