Deutsche Bank has initiated coverage of NetEase (NTES, Financial), assigning a Buy rating to the stock. The bank has set a price target of $130 for NTES, reflecting confidence in the company's potential performance. This move highlights optimism around NetEase's growth prospects in the current market environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 30 analysts, the average target price for NetEase Inc (NTES, Financial) is $120.29 with a high estimate of $159.36 and a low estimate of $95.84. The average target implies an upside of 12.96% from the current price of $106.49. More detailed estimate data can be found on the NetEase Inc (NTES) Forecast page.
Based on the consensus recommendation from 29 brokerage firms, NetEase Inc's (NTES, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for NetEase Inc (NTES, Financial) in one year is $105.26, suggesting a downside of 1.16% from the current price of $106.49. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the NetEase Inc (NTES) Summary page.
NTES Key Business Developments
Release Date: February 20, 2025
- Total Net Revenue: RMB105.3 billion for 2024, a 2% increase year-over-year.
- Q4 Total Revenue: RMB26.7 billion.
- Games and Related Services Revenue: RMB83.6 billion for 2024, up 3% from 2023.
- Online Games Revenue: RMB80.4 billion for 2024, up 6% from 2023.
- PC Client Games Growth: 17% year-over-year growth in 2024, with a 57% increase in Q4.
- Mobile Games Revenue Share: Approximately 65% of Q4 total net revenue from online games.
- Youdao Revenue: RMB5.6 billion for 2024, up 4% year-over-year.
- NetEase Cloud Music Revenue: RMB8 billion for 2024, a slight increase of over 1% year-over-year.
- Gross Profit Margin: 62.5% for 2024; 60.8% in Q4.
- Games Gross Profit Margin: 66.7% in Q4, down from 69.5% in the same period last year.
- Non-GAAP Net Income: RMB9.7 billion for Q4, up 31% year-over-year.
- Cash Position: RMB131.5 billion as of year-end 2024.
- Dividend: USD0.2424 per share or USD1.22 per ADS for Q4.
- Share Repurchase Program: Approximately 21.2 million ADS repurchased for USD1.9 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NetEase Inc (NTES, Financial) achieved a record high total net revenue of RMB105.3 billion in 2024, with RMB83.6 billion from games and related services.
- The company successfully launched new game titles, such as Marvel Rivals and Where Winds Meet, which have garnered significant player engagement and set new industry standards.
- NetEase Inc (NTES) reported a 17% year-over-year growth in PC client games, with a 57% increase in Q4, driven by strong performances from titles like Westward Journey Online II.
- Youdao, a subsidiary of NetEase Inc (NTES), achieved its first-ever annual operating profit in 2024, with a focus on technology-driven innovation and profitability enhancement.
- NetEase Cloud Music continued to drive quality development, expanding its music library and enhancing user engagement through innovative features like Lyric book and Liveo.
Negative Points
- NetEase Inc (NTES) experienced a decline in learning services revenue for Youdao, leading to a 9.5% year-over-year decrease in Q4.
- NetEase Cloud Music's net revenue decreased by 5% year-over-year in Q4, reflecting lower revenue from social entertainment services.
- The company's gross profit margin for games and related services decreased to 66.7% in Q4, down from 69.5% in the same period last year.
- NetEase Inc (NTES) faced challenges in maintaining high gross profit margins for Youdao, which decreased to 47.8% in Q4 from 49.9% the previous year.
- The company reported a decrease in net revenue for innovative business and others, down 17% year-over-year in Q4, primarily due to decreased revenue from advertising services and other innovative businesses.
