On Tuesday, Citi adjusted its financial outlook for YY Inc (NASDAQ: YY), a leading global social media platform. The firm's price target for the company's shares was reduced to $46.00 from the previous $47.00. Despite the adjustment, Citi continues to recommend a Buy rating for the stock.
YY Inc recently disclosed its fourth quarter earnings for 2023, which modestly surpassed both Citi's and the general market consensus. The company's revenue guidance for the first quarter of 2024 is projected to range between $543 million and $560 million, with the midpoint of this range being 5% higher than market expectations.
This positive outlook is attributed to the sustained recovery of Bigo Live, particularly in developed regions, and the solid growth of Likee. These platforms are expected to maintain momentum into the estimated period of 2024.
The company is considering increasing its marketing investments to further stimulate revenue growth, while also aiming to keep profits stable. In light of these strategies, Citi has slightly revised downward its earnings estimates for YY Inc for the years 2024 and 2025 by 17% and 14% respectively. This revision reflects the anticipated higher reinvestment costs.
A critical factor for YY Inc's stock performance in the near future is the progress on the termination of the YY Live deal. The negotiations may extend over a period since Baidu (NASDAQ:BIDU) has been in control of YY Live for some time.
Nonetheless, Citi maintains a positive outlook on YY Inc, bolstered by the company's strong net cash position and an unutilized share repurchase program quota of $505 million.
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