Citigroup keeps Tencent rating at Buy, lowers target price

 

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Citigroup reiterated the Buy rating for Tencent stock, but lowered the target price from HK$509 to HK$468.

Citigroup said that in a note that Tencent reported mixed results for the second quarter of the year, with its revenue of the period falling short of the bank’s estimate and market consensus by 0.4% and 1.2%, respectively, while the adjusted earnings exceeding Citigroup’s forecast and consensus by 14.4% and 15.4%, respectively, primarily due to the improved efficiency achieved through the reduction of non-core businesses and optimization of staff costs.

Tencent management believes that the company’s regulatory environment is returning to normal and has sent positive signal for the platform economy and it also expects its business to benefit for a broad-based economy improvement in China.

Tencent’s revenue was predicted to improve progressively towards the end of this year and resume positive growth in 2023, the bank said.