On Friday, Bernstein SocGen Group maintained its positive stance on Tencent Music Entertainment Group (NYSE:TME), reaffirming an Outperform rating with a price target of $14.00. The stock, currently trading at $11.55, has shown strong momentum with a 39% return over the past year. The endorsement of the company's stock persists as the firm continues to monitor Tencent Music's performance in the competitive entertainment sector.
The Outperform rating indicates that Bernstein SocGen Group believes Tencent Music's stock is expected to perform better than the average return of the sector over a specified period. This rating is a signal to investors that the firm views the company's prospects favorably relative to its peers.
Tencent Music Entertainment Group, listed on the New York Stock Exchange, is a leading online music platform in China. It operates popular apps that provide music streaming services, and it has a significant user base in the rapidly growing Chinese market. According to InvestingPro, the company maintains strong financial health with an overall score of "GREAT" and holds more cash than debt on its balance sheet.
The $14.00 price target set by Bernstein SocGen Group suggests that the firm anticipates the value of Tencent Music's shares could reach this level in the future. This target is a key indicator for investors, reflecting the firm's analysis of the company's potential market performance and overall valuation.
The reaffirmation of both the rating and price target by Bernstein SocGen Group comes as Tencent Music continues to navigate the challenges and opportunities within the global and Chinese online music industries. The company's ability to innovate and capture market share is critical to its growth and the realization of the price target set by the firm.
In other recent news, Tencent Music Entertainment Group reported noteworthy developments in its third-quarter earnings for 2024. The company's total revenues saw a 7% year-over-year increase, reaching RMB 7 billion. This growth was significantly driven by the online music services revenue, which surged by 20% to RMB 5.5 billion, largely due to a similar rise in music subscription revenues. Tencent Music's adjusted net profit and IFRS net profit also experienced substantial growth, with increases of 35% and 29% respectively.
In light of these developments, Citi adjusted its price target for Tencent Music, reducing it to $14.50 from the previous $15.00, while maintaining a Buy rating on the company's shares. This adjustment followed Tencent Music's third quarter earnings, which were largely in line with market expectations. The company's addition of 2 million new users exceeded both the guidance range and Citi's projections, indicating a strong growth trajectory.
Tencent Music's management has expressed a commitment to pursuing high-quality growth into 2025, with a strategy focusing on a balance between increasing the number of new subscribers and average revenue per user, along with a gradual improvement in gross profit margin and net profit.
The company anticipates a normalization in the social entertainment revenue trend, which combined with balanced growth, is expected to drive an acceleration in top-line and profit growth for 2025. Notably, the company's Super VIP members reached a significant 10 million milestone, highlighting the success of this initiative.
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