Kingsoft’s Stock Poised for Growth with Mecha BREAK’s Promising Launch: A Favorable Risk-Reward Scenario

Kingsoft (KSFTF – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst yesterday. Analyst Yang Liu CFA from Morgan Stanley maintained a Buy rating on the stock and has a HK$45.00 price target.

Yang Liu CFA has given his Buy rating due to a combination of factors related to Kingsoft’s upcoming game release. The anticipated launch of Mecha BREAK, a significant title from Kingsoft’s subsidiary Seasun, is expected to be a major driver for the company’s stock performance. The game, which is a multi-player third-person shooter targeting the global market, has already shown promising popularity by ranking 5th on Steam’s top wish list and attracting a substantial number of players during its beta test.
Yang Liu CFA’s rating is based on the potential outcomes of Mecha BREAK’s performance post-launch. If the game ranks within the top 10-20 on Steam’s global best sellers, it could lead to a 5% increase in Kingsoft’s share price, restoring investor confidence after recent earnings misses. A top 10 ranking could result in a share price increase of over 10%, indicating a strong likelihood of exceeding revenue expectations. However, even if the game ranks below the top 20, the potential downside is limited to a 5% decrease in share price, which suggests a favorable risk-reward scenario for investors.

In another report released on May 29, Jefferies also maintained a Buy rating on the stock with a HK$42.80 price target.