With Monster (NYSE:MWW) signing its largest international contract to date with the Department for Work and Pensions in the U.K.,  the company may finally be looking at a stable and predictable business opportunity in the face of rising competition from professional networking site LinkedIn (NYSE:LNKD). This contract bodes well for Monster which has already had experience in public sector employment, and this segment may be in more of a focus for the company if the corporate clients keep shifting toward social network-based alternatives.
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The U.K. deal points at some clear trends that Monster may be looking at in the coming years. This is a 4-year contract which is quite long considering the relative dynamism in the online job search market. Additionally, this deal builds further on Monster’s already extensive association with government agencies, such as its Vet Index for U.S. war veterans.
It seems that the company has veered its attention at a more stable sector that would ensure steady revenue, although at a slower growth rate compared to corporate jobs. This strategy is in stark contrast to rival LinkedIn that was focused solely on expansion in 2011. Nevertheless this deal can help Monster differentiate itself from others in an intensely competitive space.
We continue to believe that despite the challenges, Monster is currently undervalued. We have a revised $11 price estimate for Monster’s stock, which is well above the current market price.Notes: