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bne Invest
February 22, 2019 www.intellinews.com I Page 15
Russia’s leading tech company Yandex reports a strong 4Q18
Russia’s internet search company and the most valuable tech company in Europe, Yandex, re- ported another strong quarter for the last quarter of 2018. The firm’s earnings came in 3-4% above consensus for the top line and adjusted Ebitda.
“We continue to see the company as fundamental- ly very strong; however, the lingering uncertainties surrounding the shareholder structure still keep at least a part of the fundamental value locked, in our view,” Vladimir Bespalov of VTB Capital (VTBC) said in a note.
Yandex’s 4Q18 top line revenue increased 39% y/y to RUB38.8bn ($586mn), 4% above consensus.
Among its business segments, the main drivers were Search and Portal, Taxi and Experiments. Search and Portal revenue reached RUB30.7bn, with growth accelerating to 27% y/y in 4Q18 vs. 26% y/y in 3Q18.
The company remains highly profitable. Yandex’s adjusted Ebitda increased 33% y/y to RUB12.3bn and came in 3% above consensus, with the margin standing at 31.7% vs. 33.4% a year ago.
The outlook for the company looks good. Yandex's guidance for 2019 implies top line growth of 28- 32% y/y (excluding Yandex.Market) and 18-20% for Search and Portal.
Belarusian software engineer EPAM downgraded to sell, despite strong results
Belarusian software engineer EPAM was down- grade to Sell by VTB Capital (VTBC), despite its strong performance and outlook, the bank said in a note on February 18.
“EPAM’s financial performance and outlook re- main strong, as confirmed by the company’s 4Q18 results and 2019 guidance. However, the recent appreciation of the stock has brought the share price to levels that we view as unwarranted even by these strong fundamentals,” said Vladimir Bespalov of VBTC.
“In particular, we see the 2019F P/S multiple of 3.9x and P/E of 30.5x (on a non-GAAP basis) implied by the guidance, as demanding. Even
though our 2019 forecasts are slightly higher than the guidance, we still see the stock as overpriced. Having fine-tuned our model, we are raising our 12-mo TP 4% to $145, which nevertheless points to a negative ETR (-6%). We downgrade EPAM from Hold to Sell and advise investors to take profits,” Bespalov added.
Originally from Belarus, the company has a cor- porate headquarters in New York and does most of its business internationally. It has been a good example of a successful tech company coming out of the Commonwealth of Independent States (CIS), and striking deals with a raft of blue chip names. However, the lion’s share of its engineers are still based in Minsk.