Stocks were mixed in early trading this morning on the last trading day of this doozy of a week. Every major index finished lower yesterday while the S&P 500 closed negative for its 3rd consecutive day. Will stocks finish the week on a down note? Wait and see.
The Chinese economy is maturing and increasingly becoming a consumer-led economy. Given the short-term and long-term catalysts for Chinese stock, some experts are saying now is the time to get in. Our trade alert highlights a Chinese stock that looks primed for takeoff.
NetEase Inc (NTES) develops and operates mobile and PC games, communities, and eCommerce platforms. Its titles include some of the most popular games in China such as the Westward Journey series, Ghost, and partnering with Activision Blizzard (ATVI) to deliver Chinese-versions of Blizzard games to its users.
NTES became a public company in 2000. Since then, the video game industry has gone from a $20 billion industry to be worth nearly $200 billion. NTES has ridden this wave to become one of the most valuable video game companies in the world. It’s looking to maintain its standing as one of the leading gaming companies in China with new products including a VR-based, open-world, role-playing game that is highly anticipated by the gaming community.
Over the last ten years, NTES’s revenue has gone from $780 million to $8.7 billion. Next year, earnings are expected to grow by 60% and revenues by 27%. Due to this, NTES has a reasonable forward PE of 30.
NTES’s leading position in the video game market is expected to grow at a double-digit CAGR over the next decade. NTES also has shown the ability to develop and launch new games that are well-received by the public and partner with foreign developers to bring popular games to the Chinese market.
The current consensus among 36 polled analysts is to buy NTES. There are 31 Buy ratings, 4 Hold ratings and only 1 Sell rating for the stock.
NetEase is scheduled to report earnings on February 25th. Recent positive estimate revisions are a good indication that analysts anticipate an earnings beat.
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