Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Thursday, CFRA analysts adjusted their stance on Tencent Music Entertainment Group (NYSE:TME), shifting the stock rating from "Buy" to "Hold" despite increasing the price target to $18.00 from the previous $17.00. The stock, currently trading at $16.16, has surged nearly 20% in the past week and is approaching its 52-week high of $17.05. The revision follows the company’s robust performance in the first quarter of 2025. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.63 out of 5.
Tencent (HK:0700) Music’s strong Q1 2025 results have prompted CFRA to revise their earnings per American Depositary Share (ADS) forecast for the year to CNY5.55, up from CNY5.35. The analysts cited the company’s better-than-expected quarterly performance and improved earnings visibility as the primary reasons for the target price adjustment. With a revenue growth forecast of 10% for FY2025 and six analysts recently revising earnings estimates upward, the company’s growth trajectory remains promising. InvestingPro subscribers can access 12 additional key insights about TME’s performance and outlook.
The new 12-month target price suggests a forward Price to Earnings (P/E) ratio of 23.4 times, which is slightly above Tencent Music’s historical average. CFRA believes this premium is justified, given the company’s margin improvement, consistent capital returns, and a shift towards higher-margin business segments.
Despite the positive outlook on Tencent Music’s financials, CFRA’s downgrade reflects a valuation that they believe now fully accounts for the company’s medium-term earnings potential. Trading at a P/E ratio of 18.79x and with technical indicators suggesting overbought conditions, the analysts suggest that any further stock appreciation would depend on Tencent Music’s ability to enhance monetization through advertising and international expansion. For a comprehensive analysis of TME’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.
Tencent Music’s strategy, which focuses on content and platform innovation, remains unchanged. However, CFRA’s analysis indicates that the current stock price captures the expected benefits of this strategy over the medium term.
In other recent news, Tencent Music Entertainment Group reported strong financial results for the first quarter of 2025, with revenue rising 8.7% year-over-year to RMB 7.4 billion, driven by a 15.9% increase in online music services revenue. The company’s music subscription service saw a 16.6% rise, adding 1.9 million net subscribers and pushing the average revenue per user to RMB 11.4. Tencent Music’s gross margin improved to 44.1%, and net profit reached RMB 4.39 billion, supported by one-off gains of RMB 2.44 billion. Jefferies and Morgan Stanley (NYSE:MS) both raised their price targets for Tencent Music, citing growth outlook and strategic investments, with Jefferies setting a target of $17.00 and Morgan Stanley $16.50. Bernstein also increased its price target to $15.50, highlighting the company’s focused management strategy and potential deals. Barclays (LON:BARC) maintained its Overweight rating with a $16.00 target, noting the company’s shift toward organic growth. Despite these positive developments, Tencent Music’s shares dipped slightly in pre-market trading following the earnings announcement. The company remains focused on expanding its content offerings and enhancing its marketplace to drive future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.