On Wednesday, Jefferies adjusted its outlook on YY Inc (NASDAQ: YY) stock, raising the price target to $40 from the previous target of $38 while maintaining a Buy rating.
The adjustment follows the company's reported second-quarter results, which showcased revenues and non-GAAP earnings surpassing the consensus, attributed largely to the performance of its subsidiary, BIGO.
The firm noted that the mid-point of YY Inc's third-quarter revenue guidance aligns with market expectations. Additionally, the company has confirmed that its business strategies will continue as planned, despite recent changes in management.
For the full year, Jefferies anticipates that BIGO will sustain its positive revenue trajectory. The non-GAAP operating profit is expected to reflect adjustments in the audio business segment. Furthermore, the firm predicts a narrowing of losses in YY Inc's 'All Others' category.
The analyst's commentary highlighted the strong quarterly performance and the expectation of continued growth for BIGO. The reaffirmation of the company's unchanged business strategies post-management transition was also underscored as a positive indicator for the company's future performance.
In summary, with the updated price target and maintained Buy rating, Jefferies signals confidence in YY Inc's ability to achieve growth and improve profitability in the coming periods.
In other recent news, JOYY (NASDAQ:YY) Inc. has seen a significant change in its leadership, with Ms. Ting Li taking the helm as the new CEO and Chairperson of the Board. This transition follows the stepping down of Mr. David Xueling Li, who will continue to support the company's strategy from the Board.
The company reported robust Q1 2024 results, with revenues reaching $565 million, largely driven by its primary business segment, BIGO, which generated $505 million. BIGO also marked a recovery trend for the third quarter, with a non-GAAP net profit of $71 million, primarily due to a 28% year-over-year increase in live streaming revenues.
JOYY Inc.'s non-GAAP net profit rose by 34.8% year-over-year to $67 million, and the company maintained a positive operating cash flow. In a significant move, JOYY Inc. executed a share buyback, purchasing $54.5 million worth of shares within the quarter.
Looking forward, JOYY Inc. anticipates sequential growth for BIGO in the latter half of the year and a continued recovery in year-over-year revenues. The company also plans to diversify revenue streams and focus on non-live streaming revenue contributions. These are some of the recent developments in the company.
InvestingPro Insights
Recent data from InvestingPro strengthens the outlook for YY Inc (NASDAQ: YY), highlighting several financial metrics that support the analyst's positive stance. With a market capitalization of $1.99 billion and a compelling price-to-earnings (P/E) ratio of 6.64, the company presents an attractive valuation. The P/E ratio is even more appealing when adjusted for the last twelve months as of Q1 2024, sitting at 7.9.
InvestingPro Tips suggest that YY Inc holds more cash than debt on its balance sheet, which is a strong indicator of financial stability. Additionally, the company is trading at a low Price/Book multiple of 0.38, suggesting that the stock may be undervalued relative to its book value. These factors, combined with the fact that analysts predict the company will be profitable this year, provide a robust foundation for the raised price target and Buy rating from Jefferies.
For investors seeking more insights, InvestingPro offers additional tips on YY Inc, which can be found at https://www.investing.com/pro/YY. These tips could further inform investment decisions and provide a deeper understanding of the company's financial health and market position.
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