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Investing.com - Macquarie raised its price target on NetEase.com (NASDAQ:NTES) to $162.00 from $136.00 on Thursday, while maintaining an Outperform rating on the Chinese gaming company. The stock has shown remarkable momentum, delivering a 58% return over the past year and trading near its 52-week high of $141.45.
The firm cited NetEase’s strong game portfolio, which helped boost deferred revenue to 25% year-over-year growth, marking the highest increase in three years. This growth indicates that the company has passed through its trough period, according to Macquarie. With a robust gross profit margin of 63% and an impressive EBITDA of $4.8 billion, InvestingPro data shows NetEase maintains strong financial health with an overall score of "GREAT."
The research note highlighted that NetEase’s evergreen titles continue to set records despite years of operation, demonstrating the longevity of the company’s core gaming assets.
Macquarie also pointed to NetEase’s strong game pipeline, which reinforces the company’s ongoing portfolio expansion efforts in the online gaming sector.
The 19% increase in price target reflects Macquarie’s more optimistic view on NetEase’s online gaming business, which remains the company’s primary revenue driver.
In other recent news, NetEase Inc. reported first-quarter earnings and revenue that exceeded analyst expectations. This positive performance has been accompanied by several analyst actions. Jefferies maintained its Buy rating on NetEase and raised its price target from $131 to $155, citing expected catalysts in the online games sector despite challenging year-over-year comparisons. In contrast, JPMorgan downgraded NetEase from Overweight to Neutral, raising its price target to $140 due to valuation concerns following a significant stock rally. CFRA also adjusted its price target for NetEase to $130, maintaining a Hold rating, reflecting improved earnings visibility and disciplined cost management.
Meanwhile, Tencent Music Entertainment Group has seen its price target increased by Jefferies from $17 to $22, maintaining a Buy rating. The firm highlighted the growth potential in subscription revenue, which is contributing to improved earnings visibility in the online music sector. These developments indicate a dynamic period for these companies, with varying analyst perspectives shaping investor expectations.
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