On Friday, UBS maintained its Buy rating on NetEase.com (NASDAQ:NTES) and increased the stock's price target to $142 from $137.
The adjustment follows the company's fourth-quarter results, which fell short of expectations due to lower game revenues. The underperformance was attributed to seasonal effects on legacy titles and a decline in revenue from the game Justice Mobile since its launch peak.
Despite the recent shortfall, UBS anticipates that the market will shift its focus to NetEase's promising new game lineup slated for the second quarter. Among the anticipated releases is "She Diao," an open-world MMORPG set to launch on March 28.
The game is based on Jin Yong's popular "She Diao" novel trilogy and is expected to draw a significant audience in China. Additionally, "Naraka Bladepoint mobile," a battle royale game with a unique Chinese martial arts theme, is positioned to compete with existing titles like "Peacekeeper Elite."
UBS suggests that NetEase's stock tends to appreciate prior to major game launches. The firm views the current dip in earnings as a potential opportunity for investors to engage with the stock ahead of the anticipated strong second-quarter game releases. Despite a projected soft first quarter, as indicated by early game tracking, the analyst's outlook remains optimistic about the company's future performance.
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