William Blair analyst Timothy McHugh’s comments today on the deterioration of the newspaper industry and Monster.com’s takeover prospects fueled a 17% growth in shares of the job site.
McHugh said while newspaper advertising dropped 52 percent from last year, Monster only saw a 22 percent decrease in their North American operations, thus signifying the opportunity for tremendous growth online.
McHugh curtailed his analysis by saying that Monster’s existing management team’s ability to lead the company through the recession remains untested.
But he also noted that Monster’s recent improvements to the job seeker portion of their site was a strong move that resulted in many visitors converting to members.
McHugh upgraded Monster’s stock to “Outperform” from “Market Perform.” Shares of Monster jumped $1.79, or 17 percent, to $12.30 in midday trading Monday. The stock has traded between $5.95 and $29.33 over the past year.
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April 14th, 2009 at 10:54 am
That’s exactly the type of “Buy” advice that could be expected from a complete industry outsider.
This analyst doesn’t understand any of the reason Monster is at an all time low:
1. Increased competition,
2. Decreased effectiveness compared to lower cost rivals.
3. Multiple failed acquisitions that are promoted as the NEXT big thing, but turn out to be more of the same.
and then promotion campaigns.
Also, the reasons for the increased job seeker conversions is simple, more people are out of work, and they are remaining out of work, longer. Therefore, the desperation of job seekers is increasing.
Additionally, any increased functionality and search engine logic, that provides more relevant results, without annoying pop-ups (well not as many) is bound to have an increase in conversions.
I think this is mostly a “Pump and Dump” strategy. Expect the stock to get back to its normal declines the rest of the week.