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Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) was upgraded by Barclays to Overweight from Equal Weight with a $50 price target following the company's 'solid' Q2 overall revenues.
Q2 revenue grew 11% year-over-year to RMB149.21B, led by 34% Y/Y growth in advertising and 15.2% Y/Y growth in FBS (mostly WeChat Pay), which was partially offset by flat Y/Y domestic games.
Barclays analysts noted that weaker than expected domestic games proved temporary as the company intentionally took a pause in launching commercial content during Q2 and has restarted launches in Q3.
The analysts added that more importantly, new game approvals restarted last November, and, in the last two months, Tencent has introduced several major new titles and intends to launch several more rest of the year.
The analysts think that Tencent is likely to deliver some of the strongest gaming growth in coming quarters, and its strong advertising growth momentum could continue, steered by sizable new inventory release from Video Accounts and an improved AE algorithm for its overall ad platform.
Tencent has a Strong Buy rating on the Seeking Alpha Quant Rating system, which consistently beats the market. The average Wall Street Analysts' Rating agrees with a Strong Buy rating of its own. Meanwhile, the Seeking Alpha Authors' average rating is Buy.