Thursday - Benchmark has increased its price target on Tencent Holdings (700:HK) (OTC: OTC:TCEHY) shares to HK$660 from the previous HK$540 while maintaining a "Buy" rating. The adjustment follows Tencent’s strong fourth-quarter performance, which showcased a return to double-digit year-over-year revenue growth, attributed to significant achievements in both its gaming division and marketing services.
The strength in Tencent’s gaming sector was particularly noteworthy, with the company reporting an acceleration in revenue growth. This was propelled by the success of existing games and the anticipation of new releases in the pipeline. Benchmark has subsequently raised its forecast for Tencent’s gaming growth in the first quarter of 2025 and for the full year, now expecting an 11% year-over-year increase.
In addition to gaming, Tencent’s advertising division also showed promising results, with growth quickening in the fourth quarter despite broader macroeconomic challenges. This was supported by robust momentum in value-added (VA) services and enhancements to the company’s advertising technology. In light of these positive trends, Benchmark has revised its advertising growth projection for 2025 upward to 16% year-over-year.
The analyst from Benchmark highlighted the company’s focus on high-quality revenue streams, which is expected to lead to earnings surpassing revenue growth. The revised full-year 2025 adjusted earnings per share (EPS) estimate now stands at HK$28.70. The raised price target to HK$660 reflects these improved financial forecasts and the firm’s confidence in Tencent’s continued performance.
Tencent’s solid fourth-quarter results and the optimistic outlook for 2025 provided by Benchmark underscore the company’s ability to navigate a soft macro environment while still achieving growth in its core business areas. With the raised forecasts and price target, Tencent’s stock outlook appears promising as it moves further into the year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.