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Is Demand Media (DMD) Worth Adding to Your Portfolio?

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On Dec 26, Zacks Investment Research upgraded Demand Media, Inc.DMD to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of positive estimate revisions over the last 60 days.

In the past 60 days, one estimate has moved higher for Demand Media for fiscal 2015. There was no downward estimate revision for the company over this period. The consensus estimate also rose by 38 cents over the same time frame, narrowing down from a loss of $1.59 per share to a loss of $1.21.

Also, Demand Media's shares gained 28.3% over the last three months. These factors make the company an attractive investment opportunity. Moreover, Demand Media delivered positive earnings surprises in three out of the last four quarters with an average beat of 32.7%.

It is also worth noting that Demand Media's revenues from Marketplaces soared 63% in third-quarter 2015. "As we move into 2016, our top priorities will be creating high-quality and authoritative content across all of our media properties, stabilizing the eHow business and maintaining accelerating growth in our marketplaces business", said Demand Media CEO, Sean Moriarty.

Going forward, revenue addition from the Saatchi Art acquisition would support the company's top line.

However, declining desktop traffic and the company's shift from direct display advertising to lower margin Marketplaces revenues are likely to negatively impact margins. Moreover, further decline in traffic in eHow and the effect from selling CoveritLive and Pluck social media businesses are expected to affect the company's results.

Also, competition from Yahoo! Inc. YHOO remains a headwind for the company.

Other stocks in the technology sector worth considering are Semiconductor Manufacturing International Corp. SMI and NVIDIA Corp. NVDA , both of which sports the same Zacks Rank as Demand Media.

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YAHOO! INC (YHOO): Free Stock Analysis Report

NVIDIA CORP (NVDA): Free Stock Analysis Report

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DEMAND MEDIA (DMD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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