Goldman downgrades Yandex, MTS on cost of capital worries

Goldman has downgraded Russian search king Yandex (YNDX -1.2%), as well as Russian mobile carriers MTS (MBT +0.2%) and MegaFon, to Neutral.

The firm is worried about a rising cost of capital for Russian firms amid rising local interest rates and evidence of higher borrowing costs. In Yandex's case, Goldman argues the company's high P/E - shares go for 21x 2015E EPS - makes it especially vulnerable to a cost of equity increase.

At the same time, Goldman thinks Yandex will continue to benefit from improving monetization and Russian online ad growth, and believes its contextual ads will be relatively immune to macro headwinds.

Previous: Deutsche worried about Sberbank's Yandex stake

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Comments (1)
  • 11146471
    , contributor
    Comments (1397) | Send Message
    Why should anyone care for the rising costs of borrowing for a company that has zero net borrowings and free cash flow, is something I cannot comprehend...


    Regarding the P/E now; who really believes that a P/E of about 20 is high for a company that shows a CAGR of about 30 ??


    It is more of a buy signal for me here. It's more like GS saying: Eh dudes listen there is a good company here and the geopolitical tensions seem to have eased and now we are starting to analyze this again, but eh don't get over-excited with it because we don't actually know how it's going to evolve and we need a backup for any bad case so we say about p/e since we can't find anything else. Got it?
    22 Aug 2014, 01:55 AM Reply Like
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