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On Monday, CFRA analyst Ahmad Halim increased the price target for NetEase.com (NASDAQ:NTES) shares to $130 from the previous $110, while maintaining a Hold rating on the stock. The adjustment reflects the company’s improving earnings visibility, disciplined cost management, and its ability to expand global game monetization. The stock, currently trading near its 52-week high of $123.56, has demonstrated remarkable momentum with a 41.94% return over the past six months, according to InvestingPro data.
NetEase, a leading internet technology company from China with a market capitalization of $76.92 billion, has shown consistent earnings delivery, which has contributed to the analyst’s decision to set a price target that implies a trade at 19.5 times the firm’s 2025 earnings per American Depositary Share (ADS) forecast. This valuation represents a slight premium over its five-year forward price-to-earnings (P/E) average of 17 times. InvestingPro analysis reveals the company maintains an excellent financial health score of 3.79 out of 5, with 16 additional key insights available to subscribers.
The analyst justifies the premium based on NetEase’s robust financial position, characterized by a strong net cash standing and the company’s growing strength in monetizing both new and legacy game titles on a global scale. Historically, NetEase’s stock has traded between 19 and 22 times earnings during upcycles, and current trends in global game scaling and margin stability are seen as supportive of the upper end of this range.
Despite the stock’s valuation being at the higher end of NetEase’s typical trading range, the analyst believes that the premium is sustainable. This is due to the company’s first-quarter earnings surpassing expectations, a structural change in revenue composition, increasing success from its gaming portfolio, and a greater investor interest in Chinese technology companies. The analyst’s outlook indicates confidence in NetEase’s ability to maintain its current valuation premium.
In other recent news, NetEase Inc. reported first-quarter earnings and revenue that exceeded analyst expectations. The company posted adjusted earnings per share of RMB17.51 ($2.41), surpassing the consensus estimate of RMB13.89. Revenue increased by 7.4% year-over-year to RMB28.8 billion ($4.0 billion), which was higher than the projected RMB28.51 billion. NetEase’s core games and related services segment experienced a 12.1% revenue increase to RMB24.0 billion ($3.3 billion), driven by strong performances from titles like Identity V and new releases such as Where Winds Meet and Marvel Rivals. Meanwhile, Youdao (NYSE:DAO), the intelligent learning unit of NetEase, reported a 6.7% decline in revenue to RMB1.3 billion but achieved a record high first-quarter operating profit. For the second quarter, NetEase announced a dividend of $0.1350 per share, payable on June 10 to shareholders of record as of May 30. These developments reflect the company’s strong momentum and strategic focus on gaming and technology investments.
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