Credit Suisse Assumes Coverage Of Youku Tudou

Evan Zhou of Credit Suisse assumed coverage of Youku Tudou (NYSE: YOKU) on Wednesday with an Outperform rating and $22 price target.

“Our recent industry checks show that brand advertisers are putting increasing emphasis on measurable return on investments when allocating budget,” Zhou wrote. The analyst adds that the company's partnership with Alibaba Group Holding Ltd (NYSE: BABA) will result in an “advantageous position” against its peers with transactional data integration providing better return on investment transparency.

Zhou notes that the market is not expecting the company to be profitable in the near-term but the company is taking a “more proactive stance” against competitors while exploring new revenue opportunities. The analyst states that Youku is not only a brand advertising platform, but a content marketing performance ad solutions that will translate to a more diversified revenue stream over the coming years.

Zhou also adds that Youku is positioning itself within the e-commerce space through new initiatives such as “BKBM” on Youku and “WanHuo” on Tudou which both enable online purchase on Taobao and Tmall.