US$11.37 - That's What Analysts Think Tencent Music Entertainment Group (NYSE:TME) Is Worth After These Results
It's been a pretty great week for Tencent Music Entertainment Group (NYSE:TME) shareholders, with its shares surging 11% to US$11.69 in the week since its latest annual results. Tencent Music Entertainment Group reported CN¥28b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of CN¥3.11 beat expectations, being 2.8% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Tencent Music Entertainment Group
Taking into account the latest results, the current consensus from Tencent Music Entertainment Group's 27 analysts is for revenues of CN¥28.5b in 2024. This would reflect a reasonable 2.6% increase on its revenue over the past 12 months. Per-share earnings are expected to expand 18% to CN¥3.70. In the lead-up to this report, the analysts had been modelling revenues of CN¥28.2b and earnings per share (EPS) of CN¥3.36 in 2024. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 14% to US$11.37. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Tencent Music Entertainment Group analyst has a price target of US$14.00 per share, while the most pessimistic values it at US$8.00. This is a very narrow spread of estimates, implying either that Tencent Music Entertainment Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tencent Music Entertainment Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Tencent Music Entertainment Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.6% growth on an annualised basis. This is compared to a historical growth rate of 5.7% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that Tencent Music Entertainment Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tencent Music Entertainment Group's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tencent Music Entertainment Group's revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Tencent Music Entertainment Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Tencent Music Entertainment Group going out to 2026, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
