Last Friday, Paul Cheung, senior analyst of Chinese market from Independent invest company Zacks, restated the ranking of Sohu share as BUY, and raised the target price to USD 80.

Sohu just published an astounding financial report for the first quarter 2008. Pushing by the strong growth of online game business, the Q1 operation revenue and net profit of Sohu both exceeded the expectation of analysts, as well as the previous expectation of the company. Paul Cheung pointed out at the investor report that although Sohu was facing fierce competition in different areas, it is the main competitors in almost every market. As the main sponsor of Beijing Olympic Games, Sohu has a well-known brand and rich website resource, which help it gain great success in Chinese market.

On April 28, Sohu published its first quarter financial report ending March 31st. According to the report, the operation revenue of Sohu reached USD 84.8 million in the first quarter, an YoY increase of 156%, a QoQ increase of 30%. The revenue from advertisement in the first quarter was USD 34.8 million,  an YoY increase of 36%, a QoQ increase of 3%. Non-advertisement revenue was USD 50.1 million,  an YoY increase of 570%, a QoQ increase of 58%. According to CAAP, the net profit of first quarter was USD 21.6 million, USD 0.55 per share, an YoY increase of 383%, a QoQ increase of 43%. According to NON-CAAP, the net profit of first quarter was USD 25.1 million, USD 0.64 per share, USD 0.19 higher than the company's previous expectation, an YoY increase of 261%, a QoQ increase of 48%.

According to the current share price, the dynamic PE of Sohu in 2008 is 30.3 times, far below the industry average and other internet companies. Its dynamic PE in 2009 is 29 times, also below other IT companies. Based on the dynamic PE of 32 times, Zacks ranks the target share price as USD 80, and considers the price will reflect development potential in the future. At the same time, Zacks remains the ranking of Sohu share as BUY.