Monster (MNST) reported a solid Q1 relative to consensus, but Goldman still cautious. Upside already priced in. Revenue managed to remain flat against strong macro headwinds, but opex grew 26%.
- Revenue $370 million vs. $366 consensus
- EPS $0.24 vs. $0.22 consensus.
Even excluding $18m in marketing spend, Careers-North America margin contracted 270 bps. Management introduced some uncertainty about the potential acquisition of the remaining 50% of ChinaHR, which we had expected to serve as a second half catalyst for the shares.
Bottom Line: We like the business and longer-term growth prospects, but our caution on the outlook for recruitment advertising in 2008 tempers our view. Uncertainty around near-term earnings prospects and a valuation that appears fair at a 15% premium to the S&P 500 keep us on the sidelines. We are interested in the stock from a value perspective in the high-teens to low-$20 range.
Goldman upped its 2008/2009/2010 EPS estimates to $1.42/$1.86/$2.36 from $1.34/$1.85/$2.38. Shares remain Neutral rated.
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