Benchmark downgrades Joyy on Baidu deal uncertainties

Benchmark downgraded Joyy (JOYY) to Hold from Buy without a price target after Baidu (BIDU) filed with the SEC to terminate its share purchase agreement with Joyy. With Baidu’s cancellation on the deal, Joyy faces moving parts on two key perspectives: a net cash impact and fundamental complications on the company’s domestic operations and strategies going forward, the analyst tells investors in a research note. The firm acknowledges there is still substantial value in Joyy’s assets with potential valuation upside considering deal cancellation payout. However, with a potential wide range of outcomes on top of a “likely long-winded” negotiation process, Benchmark moved to the sideline pending better clarity.