CMBI Anticipates Prolonged Revenue Recognition Cycle for NetEase (NTES.US), Lowers Price Target to US$161.5
4Q25 Financial Results: NTES-S reported a 3% YoY revenue growth to RMB27.5 billion, which was 4% below market expectations, primarily due to slower game revenue growth and an extended revenue recognition cycle.
Profit and Forecast Adjustments: Operating profit increased by 6% YoY to RMB8.3 billion, also missing consensus estimates, leading CMBI to slightly lower its revenue forecasts for 2026/2027 by 1-2% and adjust the target price for NTES-S' US stock from US$164 to US$161.5 while maintaining a Buy rating.
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JPM Maintains NTES-S as Industry Favorite While Reducing Target Price to HKD280
JPMorgan's Target Price Adjustment: JPMorgan has lowered its target price for NetEase (NTES-S) from HKD295 to HKD280 and for NetEase (NTES.US) from USD190 to USD180, due to a 3% reduction in the 2026 EPS forecast linked to delays in new game launches.
Game Launch Delays: The report indicates that the launch of "Sea of Remnants" is now expected in Q3 2026 (previously Q2 2026) and "Ananta" in 1H 2027 (previously 2H 2026).
JPMorgan's Market Positioning: Despite the target price reduction, JPMorgan maintains an Overweight rating for both NTES-S and NTES-US, positioning NTES-S as a top pick in China's digital entertainment sector over a 6- to 12-month outlook.
Competitive Landscape: JPMorgan suggests that KUAISHOU-W may outperform NTES-S in the short term due to its focus on generative AI and related themes.
Daiwa Reduces NTES-S Target Price to HKD257
Stock Performance: NTES-S (09999.HK) experienced a decline of 2.400 (-1.283%) with significant short selling amounting to $260.42M and a ratio of 11.376%.
Financial Results: The company's 4Q25 online game revenue and adjusted EPS fell short of market expectations by 7.0% and 22.8%, respectively, largely due to a substantial investment loss of RMB1.7 billion.
Profitability Metrics: While the non-GAAP operating profit was only 6% below consensus, the net profit gap was more pronounced, indicating challenges in overall profitability.
Analyst Rating: Daiwa maintained a Buy rating on NTES-S but reduced the target price from HKD263 to HKD257, while also confirming a 40% dividend payout ratio for 2025.
UOB Kay Hian: NTES-S (09999.HK) Quarterly Results Fall Short Despite Robust Game Pipeline; Rating Maintained at Buy
4Q25 Financial Results: NTES-S reported a 3% year-over-year revenue growth to RMB27.5 billion, but non-GAAP net profit fell by 27%, leading UOB Kay Hian to lower its target price from $276 to $250 while maintaining a Buy rating.
Future Growth Potential: UOB Kay Hian highlighted a promising game pipeline, particularly the upcoming release of Sea of Remnants in 3Q26, which has already shown strong player interest during technical testing.
Market Sentiment: JPMorgan noted that the volatility in internet stocks reflects fragile market sentiment, suggesting that current adjustments may present buying opportunities.
Promotional Success: The second promotional trailer for Sea of Remnants received over 10 million views shortly after its release, indicating significant market interest.
CMBI Anticipates Prolonged Revenue Recognition Cycle for NetEase (NTES.US), Lowers Price Target to US$161.5
4Q25 Financial Results: NTES-S reported a 3% YoY revenue growth to RMB27.5 billion, which was 4% below market expectations, primarily due to slower game revenue growth and an extended revenue recognition cycle.
Profit and Forecast Adjustments: Operating profit increased by 6% YoY to RMB8.3 billion, also missing consensus estimates, leading CMBI to slightly lower its revenue forecasts for 2026/2027 by 1-2% and adjust the target price for NTES-S' US stock from US$164 to US$161.5 while maintaining a Buy rating.
Brokers' Recent Target Prices and Insights on NTES-S Following Results
Stock Performance: NTES-S (09999.HK) has seen a decline of 3.949%, with short selling at $186.98M and a ratio of 21.908%.
Broker Ratings and Target Prices: Ratings from three brokers for NTES-S include JPMorgan (Overweight, $295), Goldman Sachs (Buy, $257), and Jefferies (Buy, $246).
4Q25 Financial Results: Multiple brokers reported that NTES's 4Q25 revenue and net profit missed expectations, with concerns over revenue recognition and investment losses.
AI Integration: Morgan Stanley highlighted NTES-S as a pioneer in AI adoption within the gaming industry, viewing AI as an enabler for growth despite recent financial setbacks.
Nomura Reports NTES-S 4Q Net Profit Shortfall Attributed to Increased Investment Losses
4Q25 Revenue Performance: NTES-S reported a 3% YoY revenue growth to RMB27.5 billion, aligning with broker forecasts but falling 4% short of market expectations.
Operating Profit Margin: The company's non-GAAP operating profit margin increased by 0.6 percentage points YoY to 33.3%, surpassing Nomura's expectations, with a 5% YoY rise in non-GAAP operating profit.
Investment Losses: NTES-S faced an investment loss of RMB1.7 billion, significantly higher than the estimated RMB600 million, primarily due to fluctuations in the share prices of Alibaba and Pinduoduo.
Analyst Rating: Nomura has set a target price of USD160 for NetEase (NTES.US) and assigned a Buy rating, indicating a positive outlook despite recent challenges.
JPM Maintains NTES-S as Industry Favorite While Reducing Target Price to HKD280
JPMorgan's Target Price Adjustment: JPMorgan has lowered its target price for NetEase (NTES-S) from HKD295 to HKD280 and for NetEase (NTES.US) from USD190 to USD180, due to a 3% reduction in the 2026 EPS forecast linked to delays in new game launches.
Game Launch Delays: The report indicates that the launch of "Sea of Remnants" is now expected in Q3 2026 (previously Q2 2026) and "Ananta" in 1H 2027 (previously 2H 2026).
JPMorgan's Market Positioning: Despite the target price reduction, JPMorgan maintains an Overweight rating for both NTES-S and NTES-US, positioning NTES-S as a top pick in China's digital entertainment sector over a 6- to 12-month outlook.
Competitive Landscape: JPMorgan suggests that KUAISHOU-W may outperform NTES-S in the short term due to its focus on generative AI and related themes.
Daiwa Reduces NTES-S Target Price to HKD257
Stock Performance: NTES-S (09999.HK) experienced a decline of 2.400 (-1.283%) with significant short selling amounting to $260.42M and a ratio of 11.376%.
Financial Results: The company's 4Q25 online game revenue and adjusted EPS fell short of market expectations by 7.0% and 22.8%, respectively, largely due to a substantial investment loss of RMB1.7 billion.
Profitability Metrics: While the non-GAAP operating profit was only 6% below consensus, the net profit gap was more pronounced, indicating challenges in overall profitability.
Analyst Rating: Daiwa maintained a Buy rating on NTES-S but reduced the target price from HKD263 to HKD257, while also confirming a 40% dividend payout ratio for 2025.
UOB Kay Hian: NTES-S (09999.HK) Quarterly Results Fall Short Despite Robust Game Pipeline; Rating Maintained at Buy
4Q25 Financial Results: NTES-S reported a 3% year-over-year revenue growth to RMB27.5 billion, but non-GAAP net profit fell by 27%, leading UOB Kay Hian to lower its target price from $276 to $250 while maintaining a Buy rating.
Future Growth Potential: UOB Kay Hian highlighted a promising game pipeline, particularly the upcoming release of Sea of Remnants in 3Q26, which has already shown strong player interest during technical testing.
Market Sentiment: JPMorgan noted that the volatility in internet stocks reflects fragile market sentiment, suggesting that current adjustments may present buying opportunities.
Promotional Success: The second promotional trailer for Sea of Remnants received over 10 million views shortly after its release, indicating significant market interest.
CMBI Anticipates Prolonged Revenue Recognition Cycle for NetEase (NTES.US), Lowers Price Target to US$161.5
4Q25 Financial Results: NTES-S reported a 3% YoY revenue growth to RMB27.5 billion, which was 4% below market expectations, primarily due to slower game revenue growth and an extended revenue recognition cycle.
Profit and Forecast Adjustments: Operating profit increased by 6% YoY to RMB8.3 billion, also missing consensus estimates, leading CMBI to slightly lower its revenue forecasts for 2026/2027 by 1-2% and adjust the target price for NTES-S' US stock from US$164 to US$161.5 while maintaining a Buy rating.
Brokers' Recent Target Prices and Insights on NTES-S Following Results
Stock Performance: NTES-S (09999.HK) has seen a decline of 3.949%, with short selling at $186.98M and a ratio of 21.908%.
Broker Ratings and Target Prices: Ratings from three brokers for NTES-S include JPMorgan (Overweight, $295), Goldman Sachs (Buy, $257), and Jefferies (Buy, $246).
4Q25 Financial Results: Multiple brokers reported that NTES's 4Q25 revenue and net profit missed expectations, with concerns over revenue recognition and investment losses.
AI Integration: Morgan Stanley highlighted NTES-S as a pioneer in AI adoption within the gaming industry, viewing AI as an enabler for growth despite recent financial setbacks.
Nomura Reports NTES-S 4Q Net Profit Shortfall Attributed to Increased Investment Losses
4Q25 Revenue Performance: NTES-S reported a 3% YoY revenue growth to RMB27.5 billion, aligning with broker forecasts but falling 4% short of market expectations.
Operating Profit Margin: The company's non-GAAP operating profit margin increased by 0.6 percentage points YoY to 33.3%, surpassing Nomura's expectations, with a 5% YoY rise in non-GAAP operating profit.
Investment Losses: NTES-S faced an investment loss of RMB1.7 billion, significantly higher than the estimated RMB600 million, primarily due to fluctuations in the share prices of Alibaba and Pinduoduo.
Analyst Rating: Nomura has set a target price of USD160 for NetEase (NTES.US) and assigned a Buy rating, indicating a positive outlook despite recent challenges.
