Why Youku Tudou Shares Soared

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Youku Tudou soared today by as much as 10% on a positive analyst rating.

So what: Deutsche Bank has started official coverage of the Chinese online video company with a "buy" rating and a price target of $29.56. The analyst believes that the pricing disparity between online video and offline TV will help sales grow at a compound annual rate of 50% through 2015.


Now what: In the meantime, margins are expected to improve along with revenue gains. Deutsche Bank believes that margins can expand by 2015 to 53%, which will help contribute to adjusted operating margins of 22% by then. The firm's price target represents a 17% upside from today's high, suggesting Youku Tudou's run may not be over.

Interested in more info on Youku Tudou? Add it to your watchlist by clicking here.

The article Why Youku Tudou Shares Soared originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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