Tencent Music Entertainment Group (TME) PT Raised to $17 at CFRA

CFRA analyst Ahmad Halim raised the price target on Tencent Music Entertainment Group (NYSE: TME) to $17.00 (from $13.00) while maintaining a Buy rating.

The analyst commented, "We raise our 2024/2025 earnings per ADS forecast for TME to an above-consensus CNY4.12/CNY5.23 (from CNY3.60/CNY4.36) after its earnings beat. We raise our 12-month target price to USD17 (from USD13), at 29.8x our 2024 earnings per ADS (25% premium to its five-year average). We think continued earnings beats ahead may drive share price, but consensus expectations are catching up. We see strong growth for the Online Music Services business led by subscriber gains and higher penetration of paying users, while average revenue per paying user should grow on narrowing discounts and upselling. The fading drag from Social Entertainment Services should also boost revenue growth prospects. Margin should rise in 2024 given revenue growth amid continuing cost control. TME's first-ever dividend plus its USD500 mln buyback (53% remaining) is positive for shareholder returns but may signal slower growth ahead. In Q1 2024, revenue +3%, with music subscription revenue +39%. Gross margin +7.8%pt to 40.9%."

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