Deutsche Bank Upgrades (NTES) to Buy on Strong Q4

February 8, 2013 7:07 AM EST Send to a Friend
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Price: $88.84 -0.68%

Rating Summary:
    11 Buy, 6 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 24 | New: 21
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Deutsche Bank upgraded (NASDAQ: NTES) from Hold to Buy with a price target of $58.00 (from $51.00) following strong Q4 results.

The firm comments, "We attribute the 4Q earnings surprise (EPS beat our estimate by 18% and Bloomberg consensus by 14%) to relatively new games, which is recurring in nature, rather than World of Warcraft's expansion pack launch, which is more one-off. We expect the 4Q momentum to continue over the next few quarters, which should also improve margins as gaming revenue shifts to in-house developed games. Further, NetEase's valuation premium vs. peers is likely to widen as the company continues to prove its game development capabilities."

The firm raised 2013 revenue forecast by 8% and EPS by 18% on solid gaming momentum and margin improvement. The firm's 2013 EPS is 7% higher than consensus.

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Shares of closed at $48.75 yesterday.

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