Yandex NV (YNDX) Earnings Preview: Currency Impact may Hold Key


Yandex NV (NASDAQ:YNDX) will be disclosing its financial results on February 18th. If the past is any indication, the strong Greenback will benefit the Russian company’s top line, as well as, the bottom line. Therefore, investors’ and analysts’ have already factored the probable gains in estimating earnings for the company for the fourth quarter.

However, even if Yandex NV (NASDAQ:YNDX) managed to post better than estimated financial numbers, there was a threat of advertisers slashing their budget in the current year. This would limit the scope to provide any upbeat outlook for the year 2015. Goldman Sachs Group Inc (NYSE:GS) has already reduced its rating on the company’s shares to Sell citing estimates of 15% shrinkage in the advertising market in Russia.

Investors will look for any updates management can provide on how clients’ budgets are shaping up for the next year to alleviate concerns in that arena.

In the third quarter, Yandex’s owned and operated websites constituted 71% of total revenues and grew 33% year-over-year. The acceleration of approximately 540 basis points on a sequential basis was driven by a healthy growth of paid clicks, as well as positive CPC dynamics on Yandex’s websites. Investors hope that amid geopolitical conditions, these growth trends will propel Yandex to a beat.

Currency Impact

During the previous quarter results, the company indicated that its results benefited by RUR 1.82 billion citing the U.S. dollar appreciation of around 15%. The ruble has tumbled 46 percent in the past six months as Russia faces economic contraction amid a decline in oil prices and geopolitical concerns from the Ukraine situation, which have led to economic sanctions.

Earnings Expectations

Three months ago, Street analysts’ estimated earnings of 13.60 a share from the company. This was trimmed 5.5% to 12.85 a share, reflecting decreasing expectations.

Currently, analysts’ expect Yandex NV (NASDAQ:YNDX) to deliver earnings of 12.85 a share and revenue of RUR 14.74 billion for the fourth quarter. This meant analysts predict earnings growth of 27.5% on 22% revenue uptick.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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