On Wednesday, Jefferies increased the price target for YY Inc . (NASDAQ: NASDAQ:YY) shares to $46.00 from the previous $40.00 while keeping a Buy rating on the stock. The adjustment follows the company's third-quarter revenue meeting consensus and Jefferies' estimates. The reported adjusted operating profit exceeded forecasts, attributed to a stronger performance by BIGO, a subsidiary of YY Inc.
The analyst noted that the guidance for fourth-quarter revenue's midpoint aligns with market expectations. The firm anticipates that JOYY, the global video-based social media platform under YY Inc., will maintain strong operational execution accompanied by effective cost control measures. These factors contribute to the positive outlook held by Jefferies.
Looking ahead, the analyst projects that YY Inc.'s non-GAAP operating profit will see improvement by 2025. This optimism is partly based on the anticipation of reduced losses from the company's "All Other" segment, which includes various non-core investments and businesses.
The revised price target to $46 reflects Jefferies' integration of the latest business trends observed after the company released its quarterly results. The firm's endorsement of a Buy rating suggests confidence in YY Inc.'s ongoing and future business performance.
In summary, Jefferies' updated price target for YY Inc. takes into account the company's recent financial performance, its guidance for the upcoming quarter, and the expected improvement in profitability in the coming years. The firm remains bullish on the stock, expecting continued solid execution and cost management to drive positive outcomes for YY Inc.
In other recent news, Joy Inc. has showcased steady growth in its Q3 2024 financial results, with a notable revenue contribution from its core segment, Bigo. The company's group revenue reached RMB 558.7 million, with Bigo generating revenues of RMB 496 million. A 15.4% quarter-over-quarter increase in non-GAAP operating profit was also reported, with Bigo's profit rising by 5% to RMB 72.9 million.
Joy Inc. has also repurchased 12% of outstanding ADS in 2024, reflecting a commitment to shareholder returns. The company anticipates a growth trend in Bigo's paying users and expects non-live streaming revenue to continue its double-digit growth. However, it is preparing for potential challenges due to adjustments in non-core audio live streaming products.
In the words of CEO Ting Li, the company is making proactive adjustments to develop a healthier profit model and a sustainable growth ecosystem. The company's strategic focus on globalization, operational efficiency, and revenue diversification has been instrumental in driving this growth.
For Q4 2024, Joy Inc. projects net revenues to be between RMB 546-563 million. These recent developments underscore the company's commitment to operational efficiency and sustainable growth.
InvestingPro Insights
To complement Jefferies' positive outlook on YY Inc., InvestingPro data provides additional context for investors. YY's current market capitalization stands at $2 billion, with a price-to-earnings ratio of 8.63, significantly lower than many tech sector peers. This low P/E ratio, combined with an InvestingPro Tip indicating that YY is "Trading at a low Price / Book multiple," suggests the stock may be undervalued relative to its fundamentals.
The company's financial health appears robust, with InvestingPro Tips highlighting that YY "Holds more cash than debt on its balance sheet" and "Liquid assets exceed short term obligations." These factors align with Jefferies' expectation of strong operational execution and effective cost control.
Investors should note the attractive dividend yield of 4.91%, although there has been a dividend growth decline of 15.27% over the last twelve months. This high yield contributes to another InvestingPro Tip stating YY offers a "High shareholder yield," which could be appealing to income-focused investors.
For those interested in a deeper analysis, InvestingPro offers 5 additional tips for YY Inc., providing a more comprehensive view of the company's financial position and market performance.
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