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Investing.com - Jefferies has reduced its price target on iQIYI (NASDAQ:IQ) to $2.47 from $2.50 while maintaining a Buy rating on the Chinese streaming platform. The stock, which has gained over 26% in the past six months despite recent weakness, remains a prominent player in the Entertainment industry.
The firm expects iQIYI to meet total revenue estimates for the quarter, citing stronger content distribution performance that helps offset weaker online advertising revenue.
Jefferies attributes the advertising softness to fewer marketing events compared to the second quarter, while anticipating higher content costs due to an increased number of drama series released during the summer period.
The research firm projects iQIYI will incur a slight non-GAAP operating loss in the third quarter as a result of these higher content expenses.
Despite the near-term challenges, Jefferies maintains its positive outlook on the company, noting that recent regulatory developments should benefit the long-form video industry in the future. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional exclusive insights available to subscribers through the comprehensive Pro Research Report.
In other recent news, iQIYI reported disappointing second-quarter 2025 earnings, with a larger-than-expected loss. The company posted an earnings per share (EPS) of -0.14, missing the forecasted -0.03. Revenue for the quarter was 6.63 billion RMB, slightly below the anticipated 6.65 billion RMB, with declines in membership services and advertising contributing to the shortfall. Following these results, CFRA downgraded iQIYI’s stock rating from Hold to Sell, citing concerns about deteriorating margins and regulatory challenges in China. Despite these challenges, Jefferies raised its price target for iQIYI to $2.50 from $2.10, maintaining a Buy rating, influenced by management’s positive comments on new media regulations in China. Benchmark, on the other hand, maintained its Hold rating, noting ongoing challenges in key revenue segments. Tiger Securities also raised its price target to $2.50 from $2.00, while keeping a Hold rating, after the mixed results. These developments reflect a complex landscape for iQIYI as it navigates financial and regulatory hurdles.
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