I am initiating on Cheetah Mobile (NYSE:CMCM) with an anti-consensus bearish view and a $16 target price target based on sum of parts, implying 22% downside potential from Friday's close. CMCM is a young cub in China's mobile security and mobile browser space, and I see the company facing structural and competitive challenges in both the PC and the mobile segment. (click to enlarge)
My target price is derived from the mid-point of my bullish and bearish scenario. For CMCM's individual segments, I forecast 90% revenue CAGR for online marketing services and 80% CAGR for IVAS segment on steady MAU growth and the gradual ramp up of mobile ads and gaming. I forecast a 26% CAGR decline for...
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