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On Tuesday, Citi analyst Nelson Cheung revised the price target for HUYA Inc . (NYSE:HUYA) stock to $4.70 from the previous $5.00 while sustaining a Buy rating on the shares. Currently trading at $3.71, HUYA has shown impressive momentum with a 47.88% gain year-to-date. The adjustment follows HUYA’s fourth-quarter 2024 performance, which aligned with expectations, featuring a slight 2% dip in revenues to RMB 1.50 billion. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model. The company’s game services and advertising sectors experienced contrasting fortunes, with game services surging by 99% year-over-year and livestreaming ad revenue falling by 16%.
HUYA’s non-GAAP net profit for the quarter stood at RMB 1.2 million, surpassing Citi’s forecast of a RMB 20 million loss. Looking ahead to the first quarter of 2025, the company’s management indicated a temporary downturn in streamer activities and user engagement during the Chinese New Year period, which has since shown signs of recovery in February and March.
The firm anticipates increased seasonality in game services revenue, driven by a stronger lineup of game launches anticipated in the summer. Despite the potential for lower interest income to impact profits, Citi believes HUYA’s three-year commitment to a cash dividend policy reflects the company’s focus on margin improvement and financial stability.
Following a recent decline in HUYA’s stock price, Cheung views the current valuation, which is below the company’s cash value at approximately $4 per American Depositary Share (ADS), as an attractive buying opportunity. With a market capitalization of $843.62 million and strong recent performance, including a 38.96% return over the past six months, the stock has shown significant momentum. This valuation takes into account the projected three-year dividend, estimated at roughly $1.7 per ADS. The price target of $4.70 is based on a 1.25 times price-to-sales (P/S) multiple applied to the rolled-forward fiscal year 2026 estimated revenues of RMB 6.47 billion. Despite the lowered target price, Citi’s outlook on HUYA remains positive with a continued Buy recommendation. For deeper insights into HUYA’s valuation and growth potential, check out the detailed analysis available on InvestingPro, which includes over 30 key financial metrics and exclusive ProTips.
In other recent news, HUYA Inc. reported its fourth-quarter 2024 financial results, which revealed a significant miss on earnings expectations. The company posted earnings per share (EPS) of $0.01, falling short of the forecasted $0.25, and revenue of $1.49 billion, missing the anticipated $1.54 billion. Despite these misses, HUYA experienced a 25.6% year-over-year increase in total net revenues, reaching RMB 6.08 billion. The company has been focusing on expanding its game-related services, which now make up 21.9% of its total net revenues.
Jefferies analyst Thomas Chong adjusted HUYA’s stock price target to $4.70 from $5.00 but maintained a Buy rating, indicating continued confidence in the company’s long-term growth. The analyst notes the potential of artificial intelligence (AI) to enhance user experience on the platform. HUYA plans to distribute a total of no less than $400 million in dividends from 2025 to 2027, highlighting its commitment to shareholder returns. The company is also focusing on strategic transformation, emphasizing game-related services and advertising revenues as key areas for future growth.
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