Analyst Saiyi He of CMB International Securities maintained a Buy rating on NetEase (NTES – Research Report), boosting the price target to $136.50.
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Saiyi He has given his Buy rating due to a combination of factors that highlight NetEase’s strong financial performance and strategic positioning. The company reported a significant increase in operating profit, which rose by 37% year-over-year, surpassing market expectations by 25%. This was largely attributed to disciplined operating expense control, which decreased by 14% year-over-year, enhancing overall profitability.
Additionally, NetEase’s gaming segment showed robust growth, with a 12% year-over-year increase in revenue, driven by successful new game titles and strong contract liabilities growth, which is expected to support future revenue. Despite some declines in non-gaming segments, effective cost management improved gross profit margins. The company’s ability to maintain disciplined expenses and expand gross profit margins is expected to continue supporting profitability improvements, making it a compelling investment opportunity at its current valuation.
In another report released on May 15, Bernstein also maintained a Buy rating on the stock with a $125.00 price target.