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Jefferies: Blucora could see "growth tailwinds" but "better clarity" needed on Google-based business

  • Blucora (BCOR -0.2%) is initiated cautiously by Jefferies at Hold with a PT of $31.
  • Analyst Brian Fitzgerald sees "meaningful growth tailwinds" in each of Blucora's 3 segments; however, the outlook comes with a significant caveat: "Search is still expected to contribute approximately 60% of overall revenue and profitability for 2014, and Google is expected to contribute approximately 80-90% of overall Search Revenue."
  • Although Fitzgerald does not assume issues will come up in relation to Blucora's upcoming contract renewal (the current deal expires on March 31), "On more than one occasion, we have seen other companies who depend heavily on Google for monetization lose a significant amount of business due to policy changes or a failure of contract renewal."
  • The analyst intends to "wait until there's better clarity in this segment before becoming constructive on the name."
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