Zacks Analyst Blog Highlights: CNOOC, WPP Group, Sohu.com, Kenexa and Taleo

CHICAGO--(BUSINESS WIRE)--Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: CNOOC Ltd. (NYSE: CEO), WPP Group (Nasdaq: WPPGY), Sohu.com Inc. (Nasdaq: SOHU), Kenexa Corporation (Nasdaq: KNXA) and Taleo (Nasdaq: TLEO).

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Here are highlights from Tuesday’s Analyst Blog:

CNOOC Valuation Still Attractive

CNOOC Ltd. (NYSE: CEO) reported significant revenue growth for the first quarter of 2008 due to higher oil growth. In addition, the company continues to achieve steady growth in oil and gas production and reserves.

Although there are concerns related to the volatility in global oil prices, higher operating costs and regulatory changes, we think that the company’s current valuation does not fairly reflect its positive production growth profile and leverage to the Chinese natural gas market. Therefore, we maintain our Buy rating on the stock.

WPP Group in the Right Places

We are maintaining our Buy recommendation on WPP Group (Nasdaq: WPPGY) prior to the half-year results due on August 22. Underlying revenue growth for 2008 is expected to be even better than 2007, which was up 5 percent.

The company is experiencing rapid growth in Asia, the Middle East, and Latin America. This group represents WPP Group’s fastest growing geographic segment and there is a huge potential in markets such as China, and the company expects its Asian business to account for one-third of its business within five to ten years. In China, WPP is already the largest player.

Sohu.com a Beijing Olympics Play

Sohu.com Inc. (Nasdaq: SOHU) is a leading online brand in China. The company reported blockbuster financial results for the second quarter of 2008. Both the company’s revenue and earnings were significantly higher than market expectations because of strong growth in online gaming.

Gross margin of 76% for the second quarter of 2008, was flat with the previous quarter and up from 61% in the same period of 2007. Online game revenues were US$47.9 million, up 11.5 times year-over-year and 17% quarter-over-quarter. In addition, brand advertising revenues were US$41.7 million, up 57% year-over-year and 26% quarter-over-quarter.

Although the company faces fierce competition from different fields including brand advertising, online games, wireless value added services, and search, the company manages to be a main player in almost each field. We believe SOHU should show strong growth momentum in the next few quarters.

With the Beijing 2008 Olympics sponsorship, SOHU has a well-known brand and rich website resources to leverage the great opportunities for online business in China. Overall, we think the current stock price is undervalued. Therefore, we are maintaining a Buy rating on SOHU shares.

Kenexa Needs to Best Competition

Kenexa Corporation (Nasdaq: KNXA) reported a solid second quarter, with revenue in line with our estimates and a lower-than-expected tax rate helped deliver upside to our EPS estimate.

Although we do believe that economic uncertainty is responsible for some slowing, KNXA’s chief rival, Taleo (Nasdaq: TLEO), reported strong results. We would not be buyers of the stock until KNXA demonstrates that it can outperform its peers. We therefore reiterate our Hold rating and $20 price target.

After a 40% sell-off following Kenexa’s Q3 2007 earnings release, the stock price has been flat, trading in the $18 to $20 price range. The company is trading at 12.9x our 2008 EPS estimates of $1.45, a discount to all but one of its competitors. Although the share price is well below 2007 highs, we are concerned that disappointments are not over given questions about the economy and job market.

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