Shares of Monster Worldwide Inc (MWW) surged 9.61% in regular trading on November 24 as jobless claims in the US declined by 34,000 to 407,000.
According to the Labor Department, approximately 407,000 workers filed new applications for unemployment benefits last week, the lowest in over two years.
Monster is an online recruitment firm of the parent company Monster.com, the leading career website in the world. Monster works by connecting employers with quality job seekers at all levels and by providing personalized career advice to consumers globally through online media sites and services.
The worldwide economic slowdown has caused companies to reduce headcount, freeze hiring and delay recruitment related decisions. The primary source of revenue for the company is recruitment advertising. Many of the key industry verticals of financial services, retail, manufacturing and construction, served by Monster were severely affected by the slowdown in the global economy.
This had adversely impacted the business of Monster as top line tumbled down in late 2008 and early 2009. Nevertheless, with the economy showing sings of revival and macro business environment improving, Monster should expect business to gradually pick up pace.
With signs of a recovering economy, we expect companies to increase their recruitment via online vehicles such as Monster.com. Monster is seeing noteworthy increases in renewal rates, repeat customers and new customers. Customers are increasing their purchases ahead of a complete economic recovery.
Monster recently acquired HotJobs from Yahoo. HotJobs is a leading online recruitment website, which was previously owned by Yahoo! Inc. (YHOO). The HotJobs acquisition should strengthen Monster’s position in the online job market and global recruitment resources.
Along with an expanding customer base, Monster will now have access to roughly 62% of the US Internet population (130 million). Monster will also expand its newspaper partnerships from 400 to 1000 with the addition of 600 HotJobs daily and weekly newspapers providing local reach in all 50 states.
While the impact of these positive developments will not be felt in 2010, we expect the company to return to profitability in 2011. In the long-run, we would like to be cautious on its path to recovery and hence maintain our Neutral recommendation on the stock.
However, in the short-run, the stock carries a Buy rating supported by Zacks Rank #2 as Monster reported solid results for the third quarter and provided a strong outlook for the fourth quarter.