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Monster Woes Scare Off Analysts

Wall Street is losing confidence in online recruiter Monster Worldwide, as the company struggles to find its footing in the rapidly changing market.

The mascot and symbol for Monster Worldwide stands in front of the NASDAQ Market Board at  in New York City.
Getty Images
The mascot and symbol for Monster Worldwide stands in front of the NASDAQ Market Board at  in New York City.

Over the last week, the embattled firm saw a rush of downgrades and price target cuts from analysts. Monster’s stock fell more than 20 percent as a result.

The latest hit came Wednesday with a mea culpa note from Oppenheimer, which cut its rating on Monster stock to “Perform” from “Outperform”.

“We stayed too long, were late to see potential cyclical deceleration in MWW's Europe business, and most importantly didn't appreciate the extent of the challenges within MWW's North American business,” write Oppenheimer analysts.

The firm reduced Monster’s FY12 EPS estimate by 65 percent, to $0.19 from $0.55 — which itself was reduced after 3Q11 results. Oppenheimer also cut Monster’s FY12 EBITDA estimate to $148 million from $221 million.

“We hate downgrading after such a sharp share decline, but our thesis has changed and we can no longer recommend the shares,” says the note.

Last week, Deutsche Bank reiterated its “Sell” rating on Monster, concluding that the company’s guidance suggests “there’s no light at the end of the tunnel.” The firm cut Monster’s price target to $5.

UBS , Citigroup , S&P Capital IQ, among others, also cut Monster’s price target.

According to Deutsche analysts, Monster has lagged its peers in growth during the recovery and is now decelerating faster.

The firm said that Monster is in need of major changes.

“Unless the company reduces job posting prices, increases marketing spend (to build job seekers) & reduces its expense base, we do think its competitive position and profits will further erode in coming years,” says the report.

Growing competition is among the top concerns for Monster. Job-search site CareerBuilder seems to be rapidly gaining share.

According to Oppenheimer, during 4Q11 CareerBuilder's North American revenue growth approximated 10 percent year-over-year compared to the 5 percent decline for Monster’s North America business.

There are also questions about the impact from social networking sites like LinkedIn .

But Monster remains unfazed.

“In a challenging environment, Monster Worldwide has continued to perform well,” company’s spokesperson told CNBC. “Monster is confident that with the successful execution of its strategies, it can drive results for shareholders and customers alike.”

Meanwhile, the stock is down more than 55 percent in one year.

Questions? Comments? Email us at marketinsider@cnbc.com and follow me on twitter @kfrayter

Disclaimer

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