Brean Murray Raises Price Target, Estimates On Netease.com (NTES)
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Brean Murray raised its price target on Netease.com (Nasdaq: NTES) to $43, reiterating their Buy rating, after the company disclosed additional information on its relationship with Activision Blizzard, Inc. (Nasdaq: ATVI).
Brean Murray notes on World of Warcraft it is a 3-year contract with a one year extension option. NTES has committed to a $30M upfront license and $174.6M in committed royalties, fees to Blizzard and minimum marketing expenditure commitments.
For Starcraft 2/WarCraft 3/Battle.net, Brean Murray notes NTES paid Blizzard a $4M upfront license and committed an additional $6M million in license payments upon the start of beta testing and commercial release of Battle.net. It addition, NTES committed $86.9M in royalties, fees to Blizzard and minimum marketing expenditure commitments.
The company also disclosed that the JV with Blizzard has a 50/50 structure.
The firm estimates WoW could add $0.60-$0.70 in EPS next year, while Starcraft 2/WarCraft 3/Battle.net could add $0.30-$0.35 in EPS.
The firm raised FY10 estimates to $3.08 in GAAP EPS and $898M in revenue.
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