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Investing.com - Bernstein SocGen Group raised its price target on Tencent Music Entertainment Group (NYSE:TME) to $27.50 from $25.00 on Wednesday, while maintaining an Outperform rating on the stock. The entertainment giant, now valued at over $40 billion, has seen its shares surge 126% year-to-date, according to InvestingPro data.
The research firm cited Tencent Music’s strengthening music ecosystem and continued product development as key factors that could drive further upside for the stock.
Bernstein noted that TME is in the early phases of its ecosystem development, with more initiatives and new features expected in coming months and quarters, including exclusive content deals and artist engagement.
The firm also identified the approval of the XML deal as a potential catalyst, suggesting that synergies from this deal are not fully priced into the current stock value.
Bernstein justified its higher price target based on expectations of a faster EPS growth profile and a 25x forward multiple, supported by a free cash flow growth profile projected to increase from 14% to nearly 24% of revenue.
In other recent news, Tencent Music Entertainment Group has seen a flurry of activity surrounding its financial performance and future prospects. The company reported second-quarter revenue and non-IFRS earnings that surpassed both consensus estimates and Jefferies’ projections, indicating robust financial health. Analysts have responded positively, with Mizuho raising its price target to $28 from $17, citing strong execution and a focus on average revenue per user (ARPU) growth. Similarly, Jefferies increased its price target to $28 from $26, maintaining a Buy rating on the stock.
Goldman Sachs also raised its price target to $21 from $15.50, optimistic about Tencent Music’s ARPU growth potential, particularly from its Super VIP subscription tier. The firm forecasts 10% ARPU growth for 2025 and high-single-digit growth for the following years. Macquarie joined the trend by increasing its price target to $26.20 from $17.10, highlighting the company’s transformation into a comprehensive music powerhouse, which could enhance pricing power and monetization opportunities. These developments underscore the positive outlook analysts have on Tencent Music’s strategic initiatives and financial performance.
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