Seeking Alpha

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 (842) | 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, 01:55 AM Reply Like
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