Monster got a boost Friday when investment bank UBS upgraded the company’s stock to a buy.
In its recommendation, UBS said the job board’s North American division will continue to be challenged, but it is more optimistic about its growing international business and the potential revenue boost from the introduction of its 6 Sense search technology overseas.
The 44 percent drop in Monster’s stock price UBS considers overdone; its 52-week high hit $25.90; today’s price is right around $13.50. However, while recruitment budgets are generally stable, UBS says the North American business, which comes largely from the U.S., has plenty of competition from niche sites.
As if to prove the point, Monster recently launched a recruiting site for expatriate Indians featuring jobs in the homeland. The flashy ReturntoHome channel, part of Monster’s India job board, has a prominent Flash presentation promoting India as “the land of opportunities.” Besides noting the country is now the 4th-largest economy in the world, it enthuses “your family will surely enjoy the same lifestyle in India.”
According to an account in The Wall Street Journal, a Monster India survey discovered that traffic to the site from those outside India increased last year by 65 percent. By late last year, Monster India had 250,000 resumes from those outside the country. The largest number came from residents of Gulf countries in the Middle East and from the U.S.
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Meanwhile, in an analysis by Trefis, a community based, stock analytics and predictive pricing site, Monster was given a current price estimate of $14, which was then slightly below its market price. A big part of the price-setting was the decline in Monster’s North American job postings since the start of the recession. Trefis says postings went from 1.9 million in 2007 to 1.1 million last year.
With the upturn in hiring, the postings are rising, but Trefis says Monster will need to close on its federal government contracts. Says Trefis, “If the government delays further and if employment fails to pick up, we could see downside to our estimates.”
Company officials noted the uncertainty in government hiring during its Q1 financial conference call.