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Citi maintains 'Buy' on Tencent stock, citing strong game revenue

EditorEmilio Ghigini
Published 21/06/2024, 11:00
© Reuters

On Friday, Citi expressed confidence in Tencent Holdings (HK:0700) (700:HK) (OTC: OTC:TCEHY) stock, maintaining a Buy rating and a price target of HK$515.00. The firm's stance comes in anticipation of the company's second-quarter 2024 earnings report, which is expected to be released around mid-August.

Citi has adjusted its estimates for Tencent, reflecting a more robust performance from the mobile game 'DnF Mobile', which has held the top grossing ranking for four consecutive weeks since its May 21 debut.

Tencent's success with 'DnF Mobile' has led to an upward revision of the grossing estimates for the game. This positive adjustment is set against a more cautious outlook for the company's fintech and social community revenues. Citi has slightly lowered its expectations for these segments, citing potential challenges in offline payment transactions and live streaming revenues.

The update from Citi arrives as Tencent Holdings prepares to disclose its financial performance for the quarter, providing investors with a clearer picture of the company's operational dynamics.

While the gaming segment shows strong momentum, the adjustment in fintech and social community revenue assumptions suggests a mixed financial landscape for Tencent.

Tencent, a major player in the technology sector, has a diverse portfolio that includes social media, gaming, and financial services. The company's ability to maintain a leading position in the mobile gaming market is crucial, especially considering the competitive and rapidly evolving nature of the industry.

Investors and market watchers will be closely monitoring Tencent's upcoming earnings report to assess the impact of the company's gaming segment on its overall financial health. The adjustments by Citi highlight the importance of individual product performance in shaping the revenue streams of large tech conglomerates like Tencent.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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