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Investing.com - Benchmark lowered its price target on Tencent Music Entertainment Group (NYSE:TME) to $25.00 from $28.00 on Thursday, while maintaining a Buy rating on the stock. The revision comes as TME shares have declined 14.79% over the past week, now trading at $19.06, though InvestingPro analysis suggests the stock remains undervalued with a GREAT financial health rating.
The price target reduction follows Tencent Music’s third-quarter 2025 results, which showed a 50% year-over-year increase in non-subscription music revenue, driven by strong performance in concerts and merchandise sales.
Despite the revenue growth, Benchmark noted that the rapid expansion of offline events negatively impacted the company’s gross margins during the quarter, creating pressure on profitability.
The research firm has modestly raised its fiscal year 2026 revenue forecast for Tencent Music but trimmed its gross margin projection by 2.8 percentage points, reflecting a 110 basis point year-over-year decline, which resulted in lower earnings estimates.
Benchmark remains positive on Tencent Music’s strategic positioning and growth outlook, particularly highlighting the company’s strengthening leadership in live entertainment and the fan-based economy as key pillars of its long-term growth strategy.
In other recent news, Tencent Music Entertainment Group reported its third-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.54, compared to the forecasted $1.52. Revenue reached $8.46 billion, exceeding the anticipated $8.23 billion. BNP Exane Paribas issued a positive outlook on Tencent Music following these results, highlighting the company’s Value-Added Services segment, which grew 16% against an expected 13%. CFRA, however, lowered its price target for Tencent Music to $21.00 from $25.00, maintaining a Hold rating due to a cautious view on member growth.
Morgan Stanley reiterated its Overweight rating and $27.50 price target, citing strategic investments in concerts and merchandise as beneficial in the long term. Macquarie maintained an Outperform rating but adjusted its price target to $28.30 from $29.80, acknowledging the company’s strong third-quarter performance. Despite the varied analyst perspectives, Tencent Music’s non-subscription music revenue exceeded expectations, reinforcing confidence in its music business momentum. These developments reflect a mix of optimism and caution among analysts regarding Tencent Music’s future prospects.
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