Russian search engine leader Yandex (YNDX) has managed to outperform the market in 2020, with shares up by 32% year-to-date. A sound Q2 earnings report should provide a solid base for further gains in the latter half of the year.
So believes Deutsche Bank’s 5-star analyst Lloyd Walmsley after Yandex beat the estimates in its latest quarterly statement.
Russia’s largest tech company posted revenue of $591.9 million, beating the forecasts by $12.82 million despite a year-over-year drop of 9.8%. Q2 GAAP EPS of -$0.14 provided a beat of $0.02.
For Walmsley, Yandex’s ride sharing platform delivered the quarter’s surprise. Displaying “better trends than LYFT and UBER,” Yandex.Taxi bottomed out at with a year-over-year decline of 39% the week lockdowns began (end of March), eventually returning to growth toward the end of May, rising to “mid-teens” in June and is “tracking over 20% in July.”
Yandex’ Marketplace growth multiplied by 3.5 and Yandex now offers more than 1 million SKUs (stock keeping units), with the figure expected to double to 2 million by the end of the year.
Walmsley sees Marketplace as a “great opportunity for a management team with one of the best execution track records to go after a needle-moving TAM that could ultimately be worth $78/share,” and further added,“We see YNDX well positioned to return to growth in 2H20 in Search & Portal and potentially exit 2020 at double-digit growth on the back of improving mix of commercial queries, continued market share gains (especially within Android) and more advertising verticals returning to growth… We would be adding to positions on any near-term weakness and see Yandex as one of the best fundamental stories in global Internet.”
All in all, Walmsley keeps a Buy on YNDX shares and gives the price target a boost – from $56 to $65. There’s upside potential of 14%, should the figure be met over the next 12 months. (To watch Walmsley’s track record, click here)
The rest of the Street backs Walmsley’s call. A unanimous 5 Buys add up to a Strong Buy consensus rating. Meanwhile, with an average price target of $62, the analysts forecast 8.5% upside from current levels. (See Yandex stock analysis on TipRanks)
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