NetEase, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Miranda Zhuang from Bank of America Securities maintained a Buy rating on the stock and has a $166.00 price target.
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Miranda Zhuang’s rating is based on several key factors that highlight NetEase’s potential for growth. Despite a slight miss on revenue expectations, the company showed a solid year-over-year growth of 8% in its topline, and its adjusted net profit was in line with forecasts. This stability in profitability, coupled with strong performance from key titles like FWJ PC, suggests a positive outlook for the company’s gaming segment.
Additionally, NetEase’s online games and value-added services (VAS) segment demonstrated robust growth, with a 12% increase in revenue year-over-year. The deferred revenue also showed healthy growth, indicating strong future earnings potential. While there are concerns about increased marketing spending and the resilience of non-FWJ games, the company’s strategic pipeline updates and restructuring efforts in domestic and overseas game studios are expected to drive future growth. These factors contribute to maintaining a Buy rating with a price objective of USD 166.