Among the major stocks in Hong Kong, Tencent Holdings Limited (HK:0700) (TCEHY) has earned favourable ratings from analysts following the release of its robust Q1 results for 2024. Analysts are bullish on the company’s share price growth based on its strong operating performance, driven by its gaming portfolio and advertising growth. Post Q1 results, Tencent stock has received 13 ratings from analysts, including 12 Buy recommendations.
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Q1 2024 marked the fifth consecutive quarter of quarterly revenue growth for Tencent. The company’s total revenues increased by 6% year-over-year to ¥159.5 billion, while net profit grew by 62% to ¥41.8 billion.
Tencent Holdings is a technology company that provides digital entertainment and internet value-added services.
Analysts‘ Bullish Views on Tencent
Jefferies analyst Thomas Chong predicts a growth rate of 26.7% in the share price. Chong believes the company’s online gaming portfolio in domestic and global markets will remain a key driving factor for its performance. He added that the company’s continued focus on upgrading its existing gaming titles is a sure-shot way to keep user engagement high.
Lately, Tencent has been facing a slowdown in its gaming business and is currently focusing on reviving its gaming portfolio. The company’s recently launched games like Valorant and Lost Ark slightly offset the downturn in its existing titles.
Chong further noted that the company’s advertising segment has grown significantly. In Q1, Online Advertising revenue increased 26% year-on-year to ¥26.5 billion.
Meanwhile, analyst Charlene Liu from HSBC projects solid growth for Tencent based on its successful titles and new releases. Liu also feels Tencent’s efforts in the AdTech space will drive higher market share for the company in the advertising market, boosting top-line growth over the next few years. Moreover, Liu highlights the scope for margin expansion with an optimum revenue mix, which could drive the operating profit higher.
Among the analysts, DBS predicts the highest upside potential for Tencent’s stock at nearly 40%.
Is Tencent a Good Stock to Buy?
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by 16 Buys and one Hold recommendation. The Tencent share price forecast is HK$454.06, which implies an upside of 21% on the current trading level.
