Yandex NV (YNDX) will extend gains from a 20-month high as Russia’s biggest Internet company boosts its dominance of the search market, according to Sberbank Investment Research’s Anna Lepetukhina, the most accurate analyst covering the stock.
Shares of Yandex, which owns Russia’s most-used web search engine, surged 8.6 percent to $29.01 in New York last week, the highest level since Sept. 19, 2011. The Hague-based company had the biggest gain on the Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S., which fell for a second week. RTS Index futures were unchanged in U.S. hours May 17.
Yandex, which gets most of its revenue from online ads, lifted its share of Russian searches to an average 61.9 percent in the three months through April, the most since August 2011, according to LiveInternet.ru data. Of the 20 Yandex analysts, 75 percent recommend buying its shares, with the average 12-month target price of $30.95 implying a 6.7 percent jump from current levels, data compiled by Bloomberg show.
“Yandex dominates the Russian search market and is steadily increasing its market share,” Lepetukhina, who has a buy rating on the stock, said by phone from Moscow May 17. “Consumers are very comfortable with it and have no intention to migrate to other search engines, such as Google.”
Lepetukhina is ranked first among analysts covering Yandex after her recommendations delivered the best total returns over the past year, data compiled by Bloomberg show. She has a price target of $31.58 on the stock, representing a 8.9 percent jump by February 2014.
Futures expiring in June on the RTS held at 140,490 May 17 as the Bloomberg Russia-US gauge added 1.6 percent, paring a 1.1 percent slump in the week. The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, advanced 1.4 percent to $26.92 in New York, trimming its weekly drop to 2.5 percent. The RTS Volatility Index, which measures expected swings in the stock futures (VEA), dropped 0.5 percent to 20.66.
Yandex’s share of the Russian search market is 2.4 times as large as Mountain View, California-based Google Inc. (GOOG)’s 26 percent, according to the LiveInternet data. Web advertising in Russia rose 35 percent in 2012 to $1.87 billion, according to the Association of Communication Agencies of Russia, or AKAR. The segment will grow 32 percent in 2013, according to UBS AG.
Shares of Yandex have surged 16 percent since April 25, when the company boosted its 2013 sales target on growth in online advertising. Yandex posted a 79 percent increase in first-quarter profit last month and said revenue may rise 30 percent to 35 percent this year, up from a February forecast of 28 percent to 32 percent growth.
The company buying back shares will also boost the stock, said Sergei Osipov, analyst at UBS in Moscow, said by phone May 17. Yandex announced plans in March to repurchase as much as 12 million shares, and has already bought 2 million, according to the company’s April 25 conference call.
UBS reiterated its buy rating on Yandex and increased its 12-month price target by 26 percent to $33, according to an e-mailed report dated May 17.
“More buybacks should be expected as the company has sent a clear signal to the market on how it plans to distribute its profit,” he said.
Yandex May 17 surge capped a four-day rally. The shares advanced for a fourth week, gaining 44 percent in the longest stretch of weekly advances since Feb. 15.
Russia’s economy grew 1.6 percent in the first quarter, the weakest pace since 2009, as the euro area’s longest recession hurt demand for commodity exports. That compares with a median estimate of 1.2 percent in a Bloomberg survey of 23 economists and a 1.1 percent increase projected by the Economy Ministry.
OAO Mechel (MTL), Russia’s biggest producer of coking coal, fell the most on the Bloomberg Russia-US gauge last week, slumping 15 percent to $3.65. MSCI Inc. said May 15 that it will remove the stock from its Russia index as of June 3, a decision that may spur funds that track the index to excise Mechel (MTLR) from their portfolios.
Moscow’s core stock market halted trading for 16 minutes May 17, following an error during routine procedures, according to a statement posted on the Moscow Exchange’s website. Trading in futures and currency markets wasn’t affected, the bourse said.
Crude for June delivery rose 0.9 percent to $96.02 a barrel on the New York Mercantile Exchange May 17. Brent for July settlement gained 0.8 percent to $104.64 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s major export blend, added 0.9 percent to $103.79.
Ruble futures showed the currency gaining 0.2 percent to 31.65 per dollar on May 17. Russia’s ruble fell 0.2 percent to 31.4210 per dollar. The ruble was little changed at 35.4197 against the dollar-euro basket used by the central bank to manage swings that erode exporter competitiveness.
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