Jefferies has reiterated its Buy rating on shares of HUYA Inc. (NYSE: HUYA), with a steady price target of $6.40.
The affirmation follows an adjustment of revenue estimates for the second half of the year, taking into account the latest business trends observed by the firm.
The analyst from Jefferies noted that for the third quarter, the revised estimates reflect the impact of macroeconomic headwinds on the company's live streaming revenue. However, they anticipate that new initiatives by HUYA will perform better than previously expected.
Moving into the fourth quarter, Jefferies projects a slight sequential increase in total revenue, driven by these new initiatives, while expecting live streaming revenue to remain stable when compared to the previous quarter.
Furthermore, Jefferies forecasts an improvement in HUYA's non-GAAP earnings, attributing this to non-operational items such as interest income. The firm's position reflects a positive outlook on HUYA's ability to navigate through economic challenges and capitalize on new business opportunities.
In other recent news, HUYA Inc., a leading game live streaming platform in China, has made significant management changes, appointing Mr. Raymond Peng Lei as the new Acting Co-Chief Executive Officer and Chief Financial Officer.
The company also announced a strong second-quarter performance, with revenues reaching Rmb1.54 billion, slightly above analysts' forecasts, primarily driven by its game-related services. Despite weaker live-streaming revenues, HUYA's non-GAAP net income surpassed analyst predictions by 21%, reaching Rmb97.0 million.
In response to these developments, Citi upgraded HUYA from Sell to Buy, further supported by HUYA's announcement of a US$250 million special cash dividend and its ongoing share buyback program. The company reported a robust cash position, with RMB 8.2 billion in cash and cash equivalents. Looking into the second half of 2024, Citi anticipates the live-streaming segment to show sequential stability and expects the momentum in game-related revenues to continue.
InvestingPro Insights
HUYA Inc.'s financial landscape offers a mix of challenges and opportunities, as highlighted by recent InvestingPro data and tips. Despite the macroeconomic headwinds noted in the Jefferies analysis, HUYA's stock has shown remarkable resilience, with a 96.55% price total return over the past year. This aligns with the InvestingPro Tip indicating a "high return over the last year."
The company's financial health appears stable, with InvestingPro data showing that HUYA "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." This strong liquidity position could provide a buffer against the economic challenges mentioned in the article.
However, investors should note that HUYA's revenue growth has been negative, with a -24.38% decline in the last twelve months as of Q2 2024. This data point supports the analyst's concerns about live streaming revenue impacts. On a more positive note, an InvestingPro Tip suggests that "net income is expected to grow this year," which could align with Jefferies' projection of improved non-GAAP earnings.
For investors seeking a deeper understanding of HUYA's potential, InvestingPro offers 13 additional tips, providing a comprehensive view of the company's financial position and market performance.
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