UPDATE: JG Capital Initiates Qihoo 360 at Neutral on Shrinking Margins

In a report published Monday, JG capital initiated coverage on Qihoo 360 (NASDAQ: QIHU) with a Neutral rating and price target of $34.

JG capital reported that, “We believe QIHU's search market share, which currently stands at ~13%, is likely to reach a cap this year because BIDU's search technology is superior to QIHU. Furthermore, we think QIHU's target market share goal of 40% by 2015 is too aggressive. As QIHU's own search engine takes time and sales people to develop and monetize, Google's traffic partner may contributed most of QIHU's search revenue. For QIHU's search business alone, we are estimating revenues of $95M in FY13 and $156M in FY14.”

Shares of Qihoo 360 closed at $32.06 on Monday.