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Tuesday, October 20, 2020

Investor Confidence is Falling for NetEase Inc. (NASDAQ:NTES)

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NetEase Inc. (NTES) shares are trading at lower $88.33 and the avg recommendation for the stock is Strong Buy, while the current analyst price target stands at $105.94.

To add more color to this target, the company’s high over the last year is $103.53 and the low is $52.62. Over the last 52 weeks, NTES is up 53.19% while the S&P 500 is up 16.45%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, NTES reported a profit of $1.39 billion. NetEase Inc. also saw revenues increase to $2.57 billion. In addition, NTES has free cash flow of $1.54 billion as of 06-2020. The company’s EBITDA came in at $716.7 million which compares well with its peers.

NTES booked profit margins of 41.60%, its Return on Equity (ROE) is 34.90%, and its Return on Assets is 19.90%. All told, it is clear that, NTES needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. NTES has a short ratio of 0.76 and outstanding shares of 3.24B.

Company Outlook

NTES has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 2.17 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 0.72. NetEase Inc. NTES also noted assets of $20.41 billion at the end of the last quarter. Investors should also keep an eye on sector updates as NTES has historically followed its peers on positive news.

All told, NetEase Inc. NTES has strung together solid data and demonstrated underlying fundamentals. At its current valuation, NTES represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

NetEase Inc. NTES is now commanding a market cap of 59.57B and a float of 375.00M. NTES is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of NTES stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in NTES, either long or short, and we have not been compensated for this article.

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