Sohu.com (SOHU)

While Sohu.com&#39;s (<a href=http://www.zacks.com/stock/quote/Sohu>SOHU</a>) third-quarter earnings beat the Zacks Consensus estimate and were in line with the company s own guidance, the outlook for the fourth quarter was far below expectation. The company&#39;s operating expenses have been steadily going up, which we fear could limit the growth in earnings. <p> Moreover, recent delays in game launches, weak ad spending, which is hurting the brand advertising revenue and intense competition pose a threat. Strength in its online games and portal business are expected to be the strongest drivers for growth beyond 2010. <p> Currently, we see limited upside for Sohu&#39;s revenue and earnings growth in the near term. We downgrade the stock to Underperform from our previous Neutral rating and set a six-month price target of $45.00.

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