Spencer Platt
Tencent Music Entertainment (NYSE:TME) shares were upgraded by Morgan Stanley on Thursday, with the investment firm citing “sustainable growth” and a strong free cash flow yield.
Analyst Alex Poon raised his rating on Tencent Music Entertainment (TME) shares to overweight from equal weight and boosted his price target to $8.50 from $4.50, noting that the company’s profit has been negatively impacted by tighter regulations on the live streaming industry since 2020, while its music segment generated losses, but that seems to have turned in the third-quarter.
“In [the third-quarter], Tencent Music Entertainment’s music segment saw its first operating profit breakeven and the live streaming business decline looks to be stabilizing,” Poon wrote in a note to clients.
“From 2023 onwards, we project the incremental profit from the music segment to surpass the social segment’s decline, leading to a sustainable [earnings per share compound annual growth rate of 10% or more between 2022 and 2024],” Poon added.
Tencent Music Entertainment (TME) shares slipped slightly more than 1% in premarket trading to $6.93.
Poon also noted that he expects subscriber growth for Tencent Music Entertainment (TME) shares to grow 20% on a compound annual basis through 2024, while incremental profit from the music segment could approach RMB 1B per year.
Last month, Benchmark upgraded Tencent Music Entertainment (TME) after the streaming music company reported third-quarter results.
Analysts are largely bullish on Tencent Music Entertainment (TME). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates TME a STRONG BUY.
Source: news.google.com
