Monster Worldwide (NYSE:MWW) is braving bearish sentiment after announcing its weak Q2 results early last month. The stock plunged after the company announced the Q2 2012 results, but has since recovered and is currently trading at approximately $7 which is still 20% below Trefis price estimate of $9. The company forecast a weak Q3 2012, keeping in view the uncertain employment outlook ahead and faces increased competition as social media compatriot LinkedIn (NYSE:LNKD) expands aggressively. We believe that a stabilizing employment scenario in the U.S., the growing popularity of the 6sense technology, and healthy margins will support the company as it revamps its product portfolio and undergoes restructuring to increase its profitability.

See our complete analysis for Monster

Improving U.S. employment scenario can offset slowdown in Europe

The U.S. unemployment rate for July stayed steady at 8.3 percent as the economy added 163,000 non-farm payroll jobs.^[1] Economists surveyed by Bloomberg News estimate that non-farm employers added another 118,000 workers last month. The figure beats the forecast of 100,000 new jobs in August.^[2] With the U.S. economy expanding at an annual rate of 1.7 percent in Q2 up from the 1.5 forecast initially, the company looks poised to have a bigger market to cater to in the coming months. We currently estimate the number of new job posting in Monster’s North American sites to grow to 1.24 million by next year.

We expect the slightly positive outlook for U.S to offset the slowdown in the European and Asian job markets. The company has increased its focus on SeeMore, a semantic search and analytics platform and Government Solutions, which matches Monster’s recruiting resources to government employers to better cater the U.S. market.

Popularity of the 6Sense® Technology can translate into more job postings

Monster’s Power Resume Search®, using 6Sense Semantic Search technology has been gaining popularity among recruiters. Kforce Inc. a leading professional staffing and solutions firm endorsed the product by signing a long term contract with the company to deploy the technology across Kforce’s organization. The technology lets recruiters make precise talent matches that traditional search engines cannot uncover. We expect the technology to lure recruiters away from other similar service providers as better matches would translate into more efficient operations for them.

Aside from these factors, the company has a solid database of resumes and potential job candidates, which is highly attractive to firms seeking workers and vice-versa. Additionally, the firm is currently seeking to restructure its operations, which may include selling certain assets, and this could enhance share value.

Key Risk: Situation worsening in Europe and Asia

If the economic situation worsens in Europe and Asia, the expected growth the north american markets may not be able to recoup the losses from the former. Worse still, if the European and Asian slowdown prevents the U.S. economy from growing, the company will have only Power Resume search to rely upon for growth.

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