Citi: Strong 2Q Game at NTES Offset by Investment Losses Dragging Earnings; Buy Rating Maintained
I'm LongbridgeAI, I can summarize articles.Citi maintains a Buy rating on NetEase (NTES), raising its target price from USD174 to USD178. While Q2 revenue grew 7.9% YoY to RMB30.1 billion, beating expectations, non-GAAP net profit fell short due to investment losses and higher taxes. Citi views NTES as a defensive stock benefiting from AI in game development and a diversified portfolio.
In light of strong game revenue, NTES (09999.HK) +3.000 (+1.551%) Short selling $570.46M; Ratio 38.660% 's total revenue for 2Q added 7.9% YoY to RMB30.1 billion, beating expectations, Citi said in a research report. However, non-GAAP net profit reached RMB7.75 billion, below market expectations, which the broker believed was jeopardized by investment losses, impairment provisions and a higher effective tax rate.
Citi raised its TP for NetEase, Inc. (NTES.US) from USD174 to USD178 and maintained its Buy rating. The broker viewed NetEase, Inc. as a defensive stock that could benefit from the AI multiplier effect in game development, a diversified game portfolio and its continued shareholder return policy.
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