UPDATE: Deutsche Bank Downgrades NetEase Following 3Q Revenue Report, Bottom-Line Miss

In a report published Friday, Deutsche Bank analyst Vivian Hao downgraded the rating on NetEase NTES from Buy to Hold, and lowered the price target from $73.00 to $66.00. In the report, Deutsche Bank noted, “NetEase recorded 3Q total gross revenues of Rmb2.5b (+4%QoQ/23%YoY), broadly in-line with our estimate and 5% higher than the Street's. Gross gaming revenue came in at Rmb2.1b (+1.9%QoQ/+21%YoY) and in-line with our forecast while ad revenues (Rmb299m) were 5% short of our estimate. Wireless and others (Rmb110m) was 22% above our estimate mainly due to a pickup in game accessories sales. As a result, non-GAAP EPADS of US$1.42 was 8%/1% below our/consensus estimates. We believe NetEase is likely to go through a painful transitional period from PC game incumbent to mobile internet with limited catalyst currently; downgrading to Hold.” NetEase closed on Thursday at $66.35.
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Posted In: Analyst ColorDowngradesAnalyst RatingsDeutsche BankVivian Hao
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