Taomee Falters Following New Analyst Coverage (TAOM, BIDU, DATE, SINA, YOKU)

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• Top dividend plays: GA, DATE, PWRD
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CHINESE INTERNET COVERAGE

Chinese companies that do their business online, typically with an e-commerce, subscription or advertising-based model

• China Spy: Investors Bid Up 'High Flying' Stocks (GA, CYOU, NQ, CGA, VIT, CEA)
• Baidu's Earnings Report Jump-Starts Chinese Internet Stocks (BIDU, GOOG, SOHU, YOKU, RENN, TAOM, SINA)
• A Pair Of Chinese Internet Names Get Some Analyst Love (CYOU, SOHU, BIDU, DATE, DANG, AMZN, TAOM, YOKU)

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Avg. Market Cap:	$3.2B
Avg. P/E Ratio:	19.1
Avg. Div Yield:	0.6%

Shares of Taomee Holdings (TAOM), the newly public Chinese Internet children’s portal, are slumping 4% after some mixed new coverage of the stock from a pair of research firms. Oppenheimer initiated coverage of the stock with a “perform” rating and a $15 price target, which implies only moderate upside from where the shares currently trade.

That tepid endorsement may be one reason the Chinese Internet Stocks Index is off 0.3%. Oppenheimer notes that Taomee has been profitable since 2009 and that the company could see favorable tailwinds regarding the growth of the children’s entertainment business in China, but the research firm also says Taomee could be vulnerable to increased competition and spending. Still, Oppenheimer likes Taomee’s long-term prospects.

Stifel Nicolaus is more bullish on Taomee, initiating coverage of the stock with a “buy” rating and $17.50 price target, which implies substantial upside from where the shares currently reside. The research firm sees Taomee as benefiting from China’s one child policy and the country’s requirement that 60% of animations broadcast there be domestically developed.

Looking at other Index members, Baidu (BIDU), the largest provider of Internet search services in China, is fractionally lower. Jiayuan.com International (DATE), China’s Match.com equivalent, is off 2% while SINA (SINA) is lower by 3%. Youku.com (YOKU) is higher by 2%.

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Tags: BIDU, DATE, SINA, TAOM, YOKU