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The war for search dominance in China is heating up. Browser and antivirus software company Qihoo 360 (NYSE:QIHU) took a shot at the dominant Baidu (NASDAQ:BIDU) when it released its own search engine recently. Now, Sohu (NASDAQ:SOHU) is being hurled into the fight with a Buy rating upgrade from Citigroup (NYSE:C) and an elevated price target of $63.70. Sohu closed at $40.98 on September 11, and has jumped over a dollar so far today.
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Citigroup used a sum-of-the-parts analysis, looking at Sohu’s key business units separately. Sogou.com, 63 percent owned by Sohu, is “fundamentally underestimated in the market.” Changyou, an online game company 67 percent owned by Sohu, is viewed as an “innovator, standing out in the increasingly converged web/mobile game space.”
While Baidu still claims technological dominance over the Chinese search market, Qihoo has been bolstered by a likely partnership with Google (NASDAQ:GOOG), which is likely to increase search revenue. ThinkEquity raised its price target on Qihoo from $30 to $32, maintaining a Buy rating.
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