JPMorgan downgrades iQIYI to Neutral on limited re-rating catalysts

JPMorgan downgraded iQIYI to Neutral from Overweight with a price target of $5, down from $10. The analyst is more cautious on the company’s near-term subscription and ads growth post the Q3 report. iQIYI’s volatility in the number of memberships seems higher than expected, which makes visibility of membership revenue growth lower than other digital entertainment platforms, the analyst tells investors in a research note. In addition, the company’s advertising revenue seems to be more impacted compared to other performance ads driven content platforms amid mediocre consumption sentiment, says the firm. It sees see limited catalysts to drive a re-rating of the shares in the next 3-6 months.