On Wednesday, BofA Securities analyst increased the price target for shares of NetEase.com (NASDAQ:NTES) to $122 from $120, while reaffirming a Buy rating. With a market capitalization of $61.57 billion and an impressive financial health score rated as "GREAT" by InvestingPro, the company appears well-positioned for growth.
Analyst's optimism is fueled by the strong performance of new games from the company, particularly in the PC gaming sector. He highlighted the success of "Marvel Rivals," which since its release on December 6, 2024, has achieved over 20 million downloads and a 24-hour peak of 644,000 players on Steam. The game has secured the number two spot globally and leads in the United States in terms of grossing on Steam as of January 14, 2025.
The analyst noted that "Marvel Rivals" has generated significant revenue, with local reports indicating RMB 400 million in gross billing on Steam and an estimated total grossing of RMB 1 billion in its first month. Based on these figures, there is now an expectation of RMB 4 billion in revenue from "Marvel Rivals" over a 12-month period.
This could further boost NetEase's already robust financial performance, which includes $15.06 billion in revenue and an impressive 62.79% gross profit margin over the last twelve months. InvestingPro analysis reveals 10 additional key insights about NetEase's financial strength and growth potential.
Another title contributing to NetEase's positive outlook is "Where Winds Meet," which was released for PC on December 27, 2024, and for mobile devices on January 9, 2025. The game has already attracted a total of 10 million players according to official data.
Despite initial low expectations and concerns about gameplay, the mobile version has received favorable user feedback. Leung's initial revenue model for "Where Winds Meet" anticipates RMB 2 billion for 2025, with further reviews pending additional user feedback.
The analyst also pointed to NetEase's robust pipeline of upcoming games, including "Frag Punk" for PC, expected to launch on March 7, 2025, with potential annual grossing of RMB 10 billion or more. Other anticipated titles include "Destiny: Rising" for mobile, likely to be released in 2025, "Once Human Mobile" with a global release scheduled for April 25, and "Ananta" for mobile, which has recently received a Banhao, indicating it may progress more quickly.
The analysis suggests that NetEase's gaming segment, particularly in the PC market, is poised for growth, underpinned by the successful launch and continued performance of its recent and upcoming titles. Trading at a P/E ratio of 14.8, the company maintains a strong balance sheet with more cash than debt.
The revised price target reflects a growing confidence in the company's revenue prospects for the year 2025. For detailed analysis and comprehensive financial metrics, investors can access the full NetEase Research Report on InvestingPro, which provides expert insights and valuation analysis among its 1,400+ covered US stocks.
In other recent news, Chinese video gaming giants Tencent and NetEase have achieved international acclaim with their recent launches, as highlighted by Bernstein. The firm estimates global video gaming revenue reached approximately $209 billion in 2023, with the Chinese market accounting for about $45 billion, leaving a substantial opportunity for Chinese developers to expand globally.
Bernstein also upgraded NetEase's stock based on PC game strength and improved earnings outlook, reflecting a positive outlook on the company's future revenue. Morgan Stanley (NYSE:MS) also upgraded NetEase.com's stock from Equalweight to Overweight, reflecting a positive outlook on the company's future revenue, particularly from its PC gaming division.
In other developments, US-listed Chinese stocks, including NetEase, experienced a significant rally followed by a downturn as investors secured profits. This fluctuation was triggered by China's policy shift towards more accommodating monetary and fiscal policies.
Bernstein SocGen Group maintained its Outperform rating for NetEase, citing the company's sound operations, reasonable valuation, and stable market sentiment. These are the recent developments regarding Tencent and NetEase.
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