Monster’s Possible Takeover Back in the Spotlight

MWW: Monster Worldwide logo
Monster Worldwide

It took just a few positive comments from Monster Worldwide’s (NYSE:MWW) CEO to propel the company’s stock to the $8.50 mark at one point. The comments broadly stated that the company is pursuing strategic alternatives to “boost investor value,” [1] and were probably required in our opinion, given how the company’s shares languished in the past year. However, we continue to believe that the market is undervaluing Monster compared to its fundamentals, which is due to investors’ being enamored with professional networking site LinkedIn (NYSE:LNKD).

Relevant Articles
  1. Monster Pushes For Shareholder Approval Of Randstad Deal As Q3 Results Slide
  2. What To Expect From Monster’s Q3 Results
  3. Monster Expecting 14% Top Line Decline In Q3; Randstad Deal On Track
  4. Decoding Monster’s $3.40 Acquisition Price: Is A Failed Turnaround Implied In The Price?
  5. Monster’s Revenue, EPS Misses Estimates Amidst Acquisition News
  6. What To Expect From Monster’s Q2 Results

See our complete analysis for Monster

Takeover Could Improve Margins

Monster already announced a hefty cut in headcount of around 400 jobs (7% of its total) earlier this year, making it clear that the company is actively trying to improve cash flows by reducing expenses. An acquisition would likely further reduce these operating expenses as certain variable cost items benefit from economies of scale.

The deal would also give Monster access to deeper pockets which it can use to invest in mobile/social based tools and applications.

Having said that, we do believe that even in the present circumstances, the company’s fundamental drivers (primarily its career services) continue to justify the $11 price estimate, which is around 42% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. Monster Worldwide Advances After CEO’s ‘Strategic’ Comment: New York Mover, Bloomberg, 2nd March 2012 []