Goldman Sachs Upgrades Tencent Music Entertainment Group (TME) to Neutral

Goldman Sachs analyst Ronald Keung upgraded Tencent Music Entertainment Group (NYSE: TME) from Sell to Neutral with a price target of $8.00 (from $5.00).

The analyst comments "Our refreshed thesis: We upgrade Tencent Music Entertainment (TME/1698.HK) to Neutral from Sell, with 12-m PER-based TPs of US$8.0 and HK$31.3, implying 8%/9% downside. We are turning incrementally positive on TME into 2023E as it is set to enter the watershed period with revived positive profit growth backed by a quicker-than-expected transformation towards a sustainable business model for online music, after a record net profit in 3Q22 as profit from online music has finally offset the structural decline of Social Entertainment. While we believe TME is set to see accelerating revenue/profit growth on a better macro backdrop benefiting subscription (music a winner of user engagement during re-open) and Ads (incremental ad inventory rather than purely macro), and clearer visibility on social entertainment with recovering economy to benefit discretionary spending, we believe the solid outperformance (+180% from trough vs. +88% of KWEB) has already priced in majority of the positive catalysts. As such, we upgrade TME to Neutral."

For an analyst ratings summary and ratings history on Tencent Music Entertainment Group click here. For more ratings news on Tencent Music Entertainment Group click here.

Shares of Tencent Music Entertainment Group closed at $8.74 yesterday.

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