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Goldman Sachs notes Focus Media's (FMCN) stock traded down ~5% intra-day yesterday, which they attribute to concern that Focus' outdoor advertising business in Beijing is subject to a rule that only Olympics sponsors can advertise on the medium during August and September.

Speaking with management overnight, the company confirmed that its commercial network, poster frame, in-store, and online businesses are not subject to this rule, which only applies to a few of the TV screens in its Beijing travel and hotel network. The travel and hotel network is immaterial to revenue or earnings. The rest of the business sounds on track, and has enjoyed a full rebound from the post-earthquake deceleration. Focus will report its 2Q2008 results in the second week of August; GSCO expects the results to be supportive for its stock in terms of both earnings and cash flows.

Reiterates Buy and $58 tgt.

Notablecalls: Expect the stock to trade up on this. Could go to $27 in a jiffy.

Source: Focus Media: Goldman Defends