Citi has maintained its sell rating on shares of DouYu International Holdings Limited (NASDAQ: NASDAQ:DOYU), while increasing the price target to $5.50, up from the previous $2.65.
The adjustment reflects an auto-correction for special dividends that were issued on the ex-date of September 3, 2023.
The firm clarified that the new target price had already incorporated the special dividends following the company's announcement.
Despite the increase in the price target, the analyst's estimates for DouYu's financial performance remain unchanged.
DouYu, a company listed on NASDAQ, operates as a platform for live-streaming of games in China. The adjustment in the price target comes after the company issued special dividends to its shareholders earlier in the month.
In other recent news, DouYu International Holdings Limited reported a decrease in total net revenues by 25.9% year-over-year to RMB1.03 billion in the second quarter of 2024.
The company attributed this decline to strong competition and a downturn in the macroeconomic environment. DouYu's mobile monthly active users (MAUs) also decreased by 12.3% year-over-year, settling at 44.1 million, while livestreaming revenues fell by 37.2% to RMB0.79 billion.
However, the company saw an increase in revenues from innovative businesses, which jumped by 80.7% to RMB242 million.
Despite a challenging quarter, DouYu initiated a share repurchase program, with US$11.2 million worth of ADS repurchased by the end of Q2 2024, and declared a special cash dividend of approximately US$300 million in early July 2024.
The company is refining its strategy to adapt to these challenges and is investing in long-term growth opportunities, including revenue diversification and tighter cost controls.
InvestingPro Insights
Amid Citi's updated price target for DouYu International Holdings Limited (NASDAQ:DOYU), InvestingPro metrics and tips provide additional context for investors. With a market capitalization of $246.44 million, DouYu's financial health is a blend of strengths and concerns. An InvestingPro Tip notes that DouYu holds more cash than debt on its balance sheet, which is a positive sign for financial stability. Additionally, the Relative Strength Index (RSI) suggests the stock is currently in oversold territory, potentially indicating a buying opportunity for investors.
On the valuation front, DouYu is trading at a low Price / Book multiple of 0.27 as of the last twelve months up to Q2 2024, which could be appealing to value-oriented investors. However, the company's revenue has seen a decline of 25.62% during the same period, reflecting the challenges facing the company. Despite a significant price uptick over the last six months, with a 136.4% return, analysts anticipate a sales decline in the current year and do not expect the company to be profitable this year.
For investors seeking a deeper dive into DouYu's financials and future prospects, InvestingPro offers additional tips that can be found at InvestingPro. Currently, there are 15 more InvestingPro Tips available that could further guide investment decisions regarding DouYu.
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