Monster-Yahoo: $10.90 Trefis Price Estimate for Monster
Monster (NYSE:MWW) announced last week that it is buying Yahoo’s (NASDAQ:YHOO) HotJobs for $225 million in cash. Under the terms of the deal, Monster will pay Yahoo $20 million to $31 million a year for Yahoo to redirect traffic to its site.
We believe that the HotJobs deal will slow job posting declines for Monster in North America and has the potential to even increase job postings over time.
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The current Trefis price estimate for Monster’s stock is $10.90 (vs. market price $14.32) and the Trefis price estimate for Yahoo’s stock is $18 (vs. market price of $15). Below we assess the impact of the deal on Monster’s job postings business.
Slower Job Posting Decline for Monster in North America
This deal will slow down Monster’s job postings declines in North America but will have little impact internationally as Yahoo HotJobs has a very limited presence outside of North America. The deal will take Yahoo out of online recruitment, leaving Monster with fewer direct competitors.
Absent the HotJobs deal, we expect the number of new job postings on Monster’s North American sites to decline slightly from about 1.1 million in 2009 to 1 million by the end of the Trefis forecast period.
We estimate that HotJobs could increase the number of job postings on Monster by 200-300K. Since employers pay Monster to list available job openings on the Monster.com website, higher job postings will have a positive impact on Monster’s stock.
You can modify our forecast above to see how the Trefis price estimate for Monster’s stock would be impacted if Monster’s job postings were to increase to 1.3 million over the forecast period instead of declining.