Citi Maintains a 'Buy' Rating on NetEase.com (NTES), Sell-Off Overdone

January 6, 2009 8:32 AM EST

Citi Maintains a 'Buy' rating on NetEase.com (Nasdaq: NTES). Price target increased from $25 to $26.

Citi analyst says, "We believe yesterday's 9.2% sell-off could be related to comments made last week by CEO Ding suggesting Internet cafe traffic has fallen ~30% since the financial crisis. We view this comment as very general in nature, and not specifically commenting on NTES' game traffic. In fact, since most of its top game (FWJ)'s users are teenagers and young kids, many of them are restricted from playing at Internet cafes anyways and hence play at home. According to our checks, NTES' game traffic specifically has been steady, and in fact there have been more promotional events in individual games over the recent holiday periods which helps drive traffic."

NetEase.com, Inc. operates an interactive online community in China, and is a provider of Chinese language content and services through its online games, Internet portal and wireless value-added services businesses.

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