Monday, September 21, 2009

Monster Worldwide (NYSE:MWW): Upgraded to Buy from Neutral at UBS; $27 price target

UBS is out with a rather major upgrade on Monster Worldwide (NYSE:MWW) to Buy from Neutral with a $27 price target (prev. $17).

According to the analyst, recent hiring trends and currency suggest modest upside to near-term estimates, while new search technology could boost 2010. They are raising their Q3 EPS estimate to $0.02, from $(0.03), 2009E to $0.10 from $(0.02), and 2010E to $0.30 from $0.02.

Optimistic About Hiring Demand
US and Europe Monster Employment Indices have shown recent improvement and together are showing sequential seasonally adjusted growth. While unemployment is still high, it is stabilizing, initial unemployment claims are now declining, and the ISM employment surveys have risen to the highest levels since last fall.

Both the US and Europe Monster Employment Indices have recently begun showing seasonally adjusted m/m improvement and moderating y/y declines. The US MEI rose 2.5% m/m in August, well above 0.2% in July, and -0.8% per month in Q2. The 3-month average rose 0.6% m/m in August, an improvement from -0.8% in July and -1.6% in Q2.

The Europe MEI rose 0.3% m/m in August, above -0.3% in July, and well above -3.1% per month in Q2. The 3-month average fell 0.8% in August when weighted for GDP and seasonally adjusted, improving from -3.1% in July, and - 2.6% per month in Q2. Sequential trailing 3-month average growth improved in six out of seven countries in the index.

Trovix Should Boost Competitiveness
UBS thinks Trovix, a new patented search technology, could be a game-changer in how employers view Monster versus its competition. We think this could enable Monster to grow market share while maintaining or increasing pricing. Trovix brings targeted search technology enabling the ranking of job applications, resumes, and job descriptions by the relevance of the search results. This should make for a more efficient and user friendly experience for employers and seekers.

In Q3-08 Monster acquired Trovix, a for $73mm. Trovix is a semantic search technology company focused on developing technology products to analyze resumes and job descriptions by considering key attributes such as skills, work history, and education. The implementation of the technology should enable Monster to provide employers (who pay to post jobs) and job seekers with innovative search capabilities that simplify the recruiting process by providing only relevant and targeted search results. UBS expects Trovix to create a much simpler and more efficient search and match experience for both job seekers and employers. The new resume search enables the employer to search for job seekers with relevant qualifications and then analyzes and ranks the information quickly and efficiently.

Notablecalls: I like this call:

- MWW is kinda of out-of-picture (or forgotten) stock

- UBS' estimates are now way above consensus

- Trovix sounds interesting

- Short interest stands at a cool 12%. You now have a stock about to reach a new high on a tier-1 upgrade. This should make people on the short side quite nervous.

The only problem here is the market as pre market action is way in the red. Yet, I think MWW can overcome this and run nonetheless.

Could be a nice 4-5% (or more) runner here.

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