Stifel cut its price target on Qihoo 360 Technology Co Ltd (NYSE: QIHU) from $98 to $88 and maintained a Buy rating.

Analyst George Askew lowered estimates for the company based on weak trends in web games and seasonality in the enterprise security business.

Askew believed “the web games industry (games played on PCs, not mobile) is being undermined in 1Q15 by a lack of compelling titles as some game developers have shifted resources toward mobile games.”

The analyst note indicated that approximately 20 percent of Qihoo’s 3Q14 revenue was comprised of web games and that the web game margins were below the company’s average.

Looking ahead, Askew felt that as China shifts towards mobile Internet, the web game industry will “sharply lag mobile games.”

According to the Game Publishing Committee of Chinese Audio and Digital Publishing Association, total web game industry revenue in Q3 2014 grew 5.9 percent q/q to $857 million. During Q3 2014, the number of web games grew 7.6 percent sequentially, compared with 52 percent the prior year.

Askew commented “that Qihoo is executing very well on its two $1 billion-plus product cycles of search and mobile games,” and continued to deserve a Buy rating despite the headwind for web games.

The firm’s $88 target price was equal to an enterprise value/adjusted EBITDA multiple of 12.2x the estimated 2016 adjusted EBITDA of $1.017 billion.

Qihoo 360 Technology recently traded at $51.88, down 5.38 percent.

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