On Tuesday, Jefferies maintained a positive outlook on HUYA Inc . (NYSE: HUYA), reiterating a Buy rating and a price target of $5.32. The firm acknowledged HUYA's second-quarter earnings, highlighting that the company's revenue met consensus and analyst expectations. Notably, the gross profit and gross profit margin exceeded forecasts.
HUYA Inc. reported a stronger operational performance than anticipated, with non-GAAP operating loss and non-GAAP earnings surpassing expectations. This favorable outcome comes despite the competitive pressures in the gaming and streaming industry, where consistent performance can be challenging to achieve.
In a move that reflects confidence in its financial health and a commitment to shareholder returns, HUYA announced a significant capital return strategy. The company declared a special cash dividend of $1.08 per American Depositary Share (ADS), which translates to approximately $250 million in total. This payout represents about 24% of the company's market capitalization based on the last closing price.
Additionally, HUYA has demonstrated prudent financial management by extending the unutilized quota under its existing share repurchase program until March 2025. This extension provides the company with continued flexibility to manage its capital allocation and support shareholder value over the coming years.
The reaffirmed Buy rating and price target by Jefferies reflect a continued endorsement of HUYA's strategy and performance. The company's recent financial results and shareholder-friendly initiatives appear to align with Jefferies' positive assessment of HUYA's stock.
In other recent news, Chinese game live streaming platform Huya (NYSE:HUYA) Inc. has reported second-quarter earnings that surpassed analyst expectations. The company posted adjusted earnings per share of $0.06, beating the consensus estimate. However, its revenue of $212.1 million was slightly below analyst projections. Despite a year-over-year decline, revenue increased 2.5% sequentially, attributed to growth in game-related services, advertising, and other businesses.
Huya also reported a slight increase in its average mobile monthly active users to 83.5 million in Q2, up from 82.9 million a year ago, driven by successful e-sports events. In addition, the company announced a special cash dividend of $1.08 per ADS, totaling approximately $250 million, and extended its existing $100 million share repurchase program through March 2025.
InvestingPro Insights
Complementing Jefferies' optimistic stance, InvestingPro data reflects a nuanced financial landscape for HUYA Inc. With a market capitalization of $1.02 billion, the company's valuation stands at a P/E ratio of -44.65, indicating investor expectations of future growth despite current unprofitability. Analysts on InvestingPro underscore HUYA's strong cash position, as it holds more cash than debt, which may support its generous capital return strategy. Additionally, while the company has faced a sales decline over the last twelve months, with a revenue contraction of 25.41%, there's an anticipated turnaround with net income expected to grow this year.
InvestingPro Tips highlight the company's high return over the last year, with a notable 87.16% price total return, and a significant price uptick of 73.39% over the last six months, reflecting a resurgence of investor confidence. Moreover, with liquid assets exceeding short-term obligations, HUYA's financial health seems robust, potentially justifying the special dividend payout. However, the company grapples with weak gross profit margins, which could be an area for future improvement.
For investors seeking a deeper dive into HUYA's financials, InvestingPro offers additional tips, including the company's expected profitability this year and its low revenue valuation multiple, among others. These insights can be found at https://www.investing.com/pro/HUYA, providing a comprehensive view of the company's financial metrics and analyst expectations.
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