Sohu.com (SOHU)

Sohu.com, Inc. (SOHU) is the second-largest Internet portal and one of the most well-known online brands in China. Sohu's pipeline for its new online games remains strong and is expected to drive meaningful growth in late 2009 and 2010.

The company spun-off part of its gaming division Changyou.com via an ADS offering, which is expected to increase its user base and help gain shares in the MMORPG (massively multi-player online role-playing game) market. We are also encouraged by the company's growing cash balance as well as its debt-free balance sheet.

We believe that the current stock price does not fully reflect the company's intrinsic value. Concerns related to online ad spending, as consumers remain cautious in their spending. We maintain our Buy rating on the shares of SOHU and raise our six-month target price to $75.00.

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