By: Jennifer Saba Wachovia Equity Research downgraded Monster Worldwide to "market perform" on concerns of a slowing economy, a shaky sales force, and increased competition.
Monster was previously rated "outperform."
In a note to investors, senior analyst John Janedis wrote that concerns are largely with the company's North America division. "We now believe incremental competition and sales force related execution issues will have a greater negative impact than we previously expected in North America."
Wachovia upgraded Monster in August anticipating that the North America problems were largely confined to the e-commerce channel and that recession fears were already built into the stock.
Now, Wachovia believes problems are more widespread in that division. The note points to turmoil in the company's sales force, with high turnover rates and open senior level sales positions in important areas.
Wachovia also sampled the top 10 designated market areas (DMAs) in the United States and found that job postings on Monster has slowed from the low teens in August to upper single digits this week. Furthermore, employment usually dips with Fed rate cuts, which it did in September. "We think recruitment advertising will slow further, even if the economy avoids a recession in 2008," wrote Janedis.
Monster is also facing increased competition from the usual suspects, like CareerBuilder and Craigslist, and new emerging recruitment players like Facebook (which just inked an alliance with Yahoo's HotJobs), according to the note.
As of late morning, Monster is trading down 62 cents to $35.19.
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