Benchmark Co. analyst Fawne Jiang maintained a Buy rating on Tencent Music Entertainment Group (TME – Research Report) today and set a price target of $19.00.
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Fawne Jiang’s rating is based on Tencent Music Entertainment Group’s robust financial performance and strategic initiatives. The company has shown healthy revenue growth and improved profitability, driven by renewed partnerships with major labels and a broader music catalog, which have enhanced user engagement. Despite a competitive market, TME’s focus on optimizing average revenue per paying user (ARPPU) through enhancements to its SVIP membership program has led to a positive outlook for ARPPU growth.
Additionally, TME has demonstrated sustained margin expansion, with gross profit margins reaching a record high. This is attributed to a favorable revenue mix shift towards higher-margin segments, content cost optimization, and a rising mix of in-house produced content. The valuation reflects confidence in TME’s long-term earnings growth potential, supporting the Buy rating with a price target of $19.
In another report released today, Barclays also maintained a Buy rating on the stock with a $16.00 price target.