CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lower our target price by USD2 to USD10 using a forward P/E of 10.2x compared to the three-year historical average of 17.4x. We are conservative on valuation given our more cautious view on mid-single-digit earnings growth. We raise our 2026 EPS estimate by RMB0.05 to RMB6.55 for 2026 and keep 2027 at RMB7.00 on revenue projections of RMB36.1B and RMB39.8B, more conservative than the consensus. The company faces significant headwinds from an intensely competitive landscape and the rise of unauthorized AI-generated content, which is pressuring music subscription growth. In response, management is accelerating its strategy to evolve from a traditional streaming service into an integrated, IP-centric music ecosystem. This involves deepening its partnership with the broader Tencent ecosystem, particularly WeChat, and expanding monetization through offline events, merchandise, and innovative fan-based membership models. We see short-term volatility in TME's addressable markets, but management remains confident.