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Investing.com - Mizuho raised its price target on Tencent Music Entertainment Group (NYSE:TME) to $28.00 from $17.00 on Wednesday, while maintaining an Outperform rating on the stock. The company, currently valued at over $40 billion, has seen its shares surge more than 130% over the past year, trading near its 52-week high of $25.98.
The price target increase follows what Mizuho described as a "strong beat" in the second quarter, which the firm said demonstrates Tencent Music’s "strong execution" during its transition to focus on average revenue per user (ARPU) growth. According to InvestingPro data, the company maintains strong financial health with a 43.11% gross profit margin and revenue growth of 5.35%.
Mizuho noted that while advertising momentum remains strong, positive early results from offline events and ecosystem expansion have positioned Tencent Music to access a larger total addressable market.
The firm anticipates increasing ARPU lift effects from SVIP as penetration improved to 12% with 15 million members in the coming quarters.
Mizuho raised its FY26 EBITDA estimate by 6%, with the new price target based on 19x the firm’s updated FY26E EBITDA, representing a 50% discount versus Spotify.
In other recent news, Tencent Music Entertainment Group reported second-quarter earnings and revenue that surpassed both consensus estimates and projections from Jefferies. Following these results, Jefferies raised its price target for Tencent Music to $28 while maintaining a Buy rating. Goldman Sachs also increased its price target to $21, citing optimism about the company’s average revenue per user growth, particularly from its Super VIP subscription tier. Macquarie raised its price target to $26.20, highlighting Tencent Music’s transformation into a more comprehensive music platform, which could enhance pricing power and diversify monetization opportunities. Additionally, Morgan Stanley increased its price target to $18, maintaining an Overweight rating based on their revenue forecast. These developments reflect a generally positive outlook from multiple analyst firms regarding Tencent Music’s financial performance and strategic direction.
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