iQIYI: Return to Growth, Margin Expansion, and New Revenue Streams Support Buy Rating

CMB International Securities analyst Saiyi He maintained a Buy rating on Iqiyi today and set a price target of $2.75.

Saiyi He has given his Buy rating due to a combination of factors related to iQIYI’s improving fundamentals and earnings outlook. He expects the company’s total revenue to return to growth in 4Q25, supported by stabilizing membership income and a strong rebound in content distribution, while non-GAAP net income is projected to swing from losses in prior periods to a meaningful profit on the back of operating leverage and better efficiency. In addition, he highlights positive momentum in newer business lines, including overseas operations, where international viewership is expanding rapidly, and micro drama and IP derivative initiatives, which are expected to enhance user engagement and diversify monetization channels.
He also anticipates margin improvement, forecasting both gross margin and non-GAAP operating margin to trend higher as revenue recovers and cost discipline remains in place, with operating profitability expected to strengthen further into FY26–27. Reflecting this more optimistic earnings trajectory, he raises his non-GAAP net income estimates for FY25–27 and slightly increases his target price, valuing the stock at 18x 2026E non-GAAP EPS. Taken together, the return to growth, improving profitability profile, and incremental contributions from innovative businesses underpin his view that the current valuation offers an attractive entry point, justifying a Buy recommendation on IQ.