Although Monster’s (NYSE:MWW) 23% YoY growth in its international career services business definitely picked up the company from its flat growth in 2009-10, tough times seem to be ahead as economic uncertainty still prevails, especially in Europe. It seems that Monster has taken notice of this fact, making a rather tough decision to cut its workforce by almost 7% in order to save cash. [1] The company’s priority in 2012 will be to focus its resources wisely in order to remain a top player in the job search market, especially as job seekers turn to LinkedIn (NYSE:LNKD) and other social media forums to find jobs.
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Challenges: Macro-environment and Competition
While Monster is experiencing a worrying employment index trend, Monster would also continue to face stiff competition from LinkedIn, both in U.S. and overseas markets. The recent decision to cut 400 jobs might be a move to free-up and invest more capital into new recruitment products. It’s too early too guess what these products may be, but a good start would be to further upgrade its mobile and tablet apps, given the boom in app usage.
We continue to believe that despite its challenges, Monster is currently undervalued.
We have a revised $11 price estimate for Monster’s stock, with the revision based on change to the company revenue/margin forecasts as well as a change in the company’s net cash/debt position.
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