U.S. may expand Nvidia and AMD’s 15% China chips deal to other companies
On Thursday, Citi analyst Yiwen Zhang increased the price target for YY Inc (NASDAQ:YY) shares to $50 from the previous figure of $46, while reiterating a Buy rating on the company’s stock. The adjustment follows YY’s fourth-quarter 2024 earnings release, which showed revenue aligned with expectations and adjusted earnings surpassing consensus estimates. According to InvestingPro data, YY’s stock has shown strong momentum with a 33% gain over the past six months, while currently trading at an attractive Price-to-Book ratio of 0.52. Analysis suggests the stock is currently undervalued based on InvestingPro’s Fair Value model.
YY Inc reported that its revenue guidance for the first quarter of 2025 is estimated to be between $482 million and $490 million. This forecast, whose midpoint is slightly below the consensus of $505 million, was anticipated due to the removal of Bigo Live from app stores for approximately one month. Additionally, Bigo may experience the impact of extended holidays in some regions during the first quarter, suggesting that a rebound in revenue is expected from the second quarter of 2025 onward. InvestingPro analysis shows the company maintains a "GOOD" overall Financial Health score of 2.56, with particularly strong ratings in price momentum and cash flow metrics.
The firm has made revisions to its financial estimates to account for the weaker performance of Bigo and increased efforts towards cost savings. The new price target reflects the release of restricted cash following the completion of the YY Live transaction.
YY Inc also announced a new three-year plan to return value to shareholders, which includes a $300 million share repurchase and a total of $600 million in dividends. This plan, however, might not meet the expectations of some investors who had higher anticipations following the closure of the recent deal.
Despite the potential investor disappointment, Citi maintains a positive outlook on YY Inc, supporting the Buy rating due to the company’s robust net cash position and a shareholder return program that is perceived as more sustainable over the long term. This aligns with InvestingPro data showing analyst consensus remains firmly bullish with a 1.67 rating (where 1 is Strong Buy), and price targets ranging from $35 to $64. InvestingPro subscribers can access 7 additional key insights about YY’s financial position and growth prospects through the platform’s comprehensive Pro Research Report.
In other recent news, JOYY Inc reported its fourth-quarter 2024 earnings, surpassing expectations with an EPS of $1.77 compared to the anticipated $1.36. However, the company’s revenue slightly missed projections, coming in at $549.4 million against the expected $551.3 million. Despite this, JOYY Inc demonstrated substantial growth in its non-live streaming segment, which increased by 55.9% year-over-year. The company has been focusing on AI integration and global market expansion, especially in developed regions, contributing to a 24.6% revenue increase from these areas.
JOYY Inc’s full-year 2024 revenue was reported at $2.24 billion, with a non-GAAP operating profit of $136 million, marking a 4.2% increase year-over-year. The company maintains a robust net cash position of $3.3 billion. Looking ahead, JOYY Inc projects net revenue between $482 million and $490 million for Q1 2025, anticipating continued double-digit growth in its non-live streaming revenue. Additionally, JOYY Inc has announced a quarterly dividend policy of approximately $200 million per year and a share repurchase program up to $300 million.
In other developments, JOYY Inc has completed the sale of its live streaming business for Mainland China and plans to change its Nasdaq ticker symbol from YY to Joy. The company remains committed to leveraging AI to enhance product development and customer service, aiming to improve operational efficiency and user experience.
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