Why Youku Tudou Shares Soared (YOKU)

Why Youku Tudou Shares Soared

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Youku Tudou (NYSE: YOKU ) soared today by as much as 10% on a positive analyst rating.

So what: Deutsche Bank has started official coverage of the Chinese online video company with a "buy" rating and a price target of $29.56. The analyst believes that the pricing disparity between online video and offline TV will help sales grow at a compound annual rate of 50% through 2015.

Now what: In the meantime, margins are expected to improve along with revenue gains. Deutsche Bank believes that margins can expand by 2015 to 53%, which will help contribute to adjusted operating margins of 22% by then. The firm's price target represents a 17% upside from today's high, suggesting Youku Tudou's run may not be over.

Interested in more info on Youku Tudou? Add it to your watchlist by clicking here.

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