Monday, March 5, 2012

Monster Worldwide Follows Through On Hiring Advisor

A day after Oppenheimer questioned whether Monster Worldwide (MWW) was serious about selling the business, news leaked after the close that it had indeed hired investment bankers. Clearly this doesn't mean a deal will be done, but it shows the intent does exist.

To step back a little, Monster's CEO had made an announcement at a conference earlier last week suggesting the company was looking for strategic alternatives to boost the stock price. The stock sprang up nearly 20% that day, but quickly settled back down as reality set in helped by Oppenheimer.

Trading should be interesting tomorrow and the rest of the week. The stock remains very cheap and any real intent to sell the company could likely fetch numbers back towards the July level of $13-15.

SunTrust analyst Tobey Sommer suggests an acquirer could ring out $100M in costs savings from reducing redundant management, marketing, and general administrative expenses. It has long been suggested that Monster has a bloated cost structure. Combine this cost savings with what still remains a strong brand and Monster might just be able to pull off a squeeze of the 14M short shares.

My suggestion is that investors be prepared to unload this stock as it hits a target in the teens. Any price jump from a deal or even potential deal would lead to highly speculative trading and the stock might not last at a target price in the mid teens for long. Just don't see this stock attracting a premium back towards the 52 week high over $18, but any sizable gain from the $7.50 level would be highly attractive at this point.






Disclosure: Long MWW in client and personal accounts. Please review the disclaimer page for more details. 




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