Yandex Advances on Bets Google Ruling Will Boost Search Engine

Updated on
  • Shares gain 18% in 3 days after Russian antitrust decision
  • Russian search-engine upgraded to hold by Goldman Sachs

Yandex NV shares rose for a third day in New York amid speculation Russia’s largest Internet search engine will benefit from the country’s antitrust case against Google Inc.

The stock, which has rallied 31 percent from a record low reached last month, led gains on Wednesday in a Bloomberg index of the most-traded Russian stocks in the U.S. Yandex has advanced 18 percent since the local antitrust authority ruled on Monday that Google has violated Russian laws by requiring that manufacturers pre-install its services on their devices. Yandex was upgraded to hold from underperform by analysts at Goldman Sachs Group Inc. on Tuesday.

“Although strategic challenges remain unresolved, this may be temporarily offset by positive market sentiment” following the decision by the Federal Anti-Monopoly Service in the Google case, Goldman Sachs analysts including Alexander Balakhnin wrote in an e-mailed note.

Google’s app-bundling requirements for Android devices broke Russian laws by abusing a dominant market position, according to the ruling. The Russian company complained to the Federal Anti-Monopoly Service earlier this year, requesting that its competitor be ordered to unbundle its services from the Android operating system and application distribution platform Google Play. Yandex has said Android’s default options push mobile users to Google services including search and maps, limiting consumers’ ability to choose such services from Yandex or other vendors.

Bullish Analysts

The Bloomberg Russia-U.S. Equity index advanced for a third day on Wednesday, gaining 3 percent to a six-week high. Yandex soared 8.8 percent to $13.22, Mobile TeleSystems PJSC added 7 percent to $7.81 for the second-biggest gain, while Sberbank OJSC rose 5.9 percent to $5.94. Moscow-based United Co. Rusal gained 3.1 percent to HK$3.61 at 10:43 a.m. in Hong Kong, poised for a five-week high.

On a scale from 1 to 5, the Yandex stock has a consensus analyst rating of 4.39, better than the average of 4.21 among 11 global peers. Short interest slipped to less than 0.2 percent of outstanding shares this week, the lowest level since 2013.

The Google ruling will help Yandex’s positioning in the mobile market, analysts at Renaissance Capital said.

“Although mobile was not the only driver of Yandex losing market share and despite the Google Chrome browser gaining popularity, we expect a positive price reaction to follow,” Renaissance analysts including David Ferguson wrote in an e-mailed note Monday, reiterating a buy rating on the stock.

— With assistance by Elena Popina

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