Analyst Bullish on Focus Media, Sohu

Piper Jaffray analyst Safa Rashtchy released a Q2 earnings preview research note earlier today. The following is a short extract:

We expect generally solid results from the China companies, driven by the strong seasonality of Q2 and continued demand for search and advertising. We note that the wireless companies will report inline results for Q2, but the guidance is likely to include 15%-30% or more reduction in current estimates. We don't believe the wireless issue will bring enough weight on the sector to pull it down. In fact, we believe there is likely to be more clear segmentation of the sectors, and a shift of investor interest to the ad-based companies like Focus Media, search companies and online services like 51jobs. Our favorite for this earnings season are Focus Media, which we believe will have the strongest quarter and Sohu, which has been drifting down lately, but we believe has strong momentum in its ad business, while the valuation is still attractive at 15x PE on '07 PF EPS. We are also more positively inclined towards currently market perform rated JOBS, as it has been under pressure with the sector and now presents the potential of rating revision, especially if estimates increase post earnings.