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On Wednesday, Jefferies analyst Thomas Chong adjusted the price target for DouYu International Holdings Limited (NASDAQ:DOYU), a company specializing in live streaming services. The new price target is set at $7.50, a reduction from the previous $9.00, while the Hold rating on the stock remains unchanged. Currently trading at $6.89, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $7.01 to $10.53.
DouYu reported its first-quarter earnings, noting revenues that fell short of Jefferies’ projections. This shortfall was primarily attributed to weaker-than-anticipated live streaming revenue, with total revenue declining 17.9% and gross margins at just 7.9%. The company also posted non-GAAP net losses that were not as substantial as expected, largely due to non-operating factors. InvestingPro data reveals 10+ additional insights about DouYu’s financial health and future prospects.
In his commentary, Chong remarked on DouYu’s current financial adjustments, stating, "DOYU is adjusting its traditional business cost structure in order to align with evolving needs." He highlighted that despite the lower revenue, DouYu is focusing on innovative business strategies, advertising, and other key areas to drive future growth. The company maintains a strong balance sheet with more cash than debt and a healthy current ratio of 1.88.
The adjustments in DouYu’s financial outlook have led Jefferies to revise their revenue and earnings estimates for the company, taking into account the most recent trends. Despite the reduced price target, Jefferies’ stance on DouYu’s stock remains at Hold, indicating a neutral perspective on its investment potential at this time.
Investors and market watchers will likely keep a close eye on DouYu’s strategic changes to its cost structure and its efforts to capitalize on innovative business opportunities and advertising as key factors in its path to recovery and future profitability.
In other recent news, DouYu International Holdings Ltd reported a 12.3% year-over-year decline in total net revenues for the fourth quarter of 2024, reaching RMB1.14 billion. Despite the overall revenue drop, the company’s innovative business segment showed a significant quarterly increase of 47.2%, contributing to 35.7% of total revenue. Citi analysts responded to these earnings by upgrading DouYu’s stock rating from ’Sell’ to ’Neutral’ and raising the price target to $10.50, citing the company’s strategic focus on higher-value segments like voice-based social networking and game prop sales. HSBC also upgraded DouYu’s stock rating from ’Reduce’ to ’Hold,’ although they reduced the price target to $9.00, reflecting expectations of improved margins through cost-cutting measures. DouYu’s management is committed to cost reduction strategies, such as cutting licensed content costs and optimizing streamer compensation, to enhance financial stability. The company’s cash and equivalents stood at RMB4.47 billion as of December 31, 2024, after issuing two special cash dividends totaling $600 million. Analysts project that DouYu’s innovative business and strategic adjustments could lead to a modest profit in 2025, with a focus on reducing dependency on live-streaming revenue.
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