Huya Analyst Says Game Broadcaster Has Solid Monetization Model, Esports Opportunities

HUYA Inc – ADR (NYSE:HUYA) is a leader in the rapidly growing online game broadcasting market, with a strong monetization model and potential upside from esports, according to Bank of America Merrill Lynch.

The Analyst

Lei Zhang initiated coverage of Huya with a Buy rating and $26 price target. 

The Thesis

The game broadcasting market is expected to grow rapidly, and BofA projects a 15-percent CAGR in users and 30-percent CAGR in revenue between 2018 and 2021, Zhang said in the Thursday initiation note.

Huya is one of the top two players in the market and the preferred platform for game fans and hosts in China, the analyst said. As of March 2019, the company had 124 million monthly average users and 670,000 hosts.

“The scale enhances its strong content ecosystem, led by its continuous efforts in game and eSports contents, engaged fan base and close ties with large game companies." 

Huya has a strong monetization model, and its content diversification should continue growing its traffic and user engagement, Zhang said.

The company is actively exploring opportunities in esports, which has gained immense popularity among game fans. This opens new opportunities and would enable Huya to further increase its user reach, according to BofA. 

Price Action

Huya shares were trading higher by 1.66 percent at $21.45 at the time of publication Thursday. 

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Photo by Dustin Blitchok.