Sina US stock news, Bloomberg News, Tencent's share price continued to fall, making the optimistic analyst target price more and more out of reach.
Concerns about profits, coupled with the fall in global technology stocks, dragged Tencent's share price down only 8% this week. As of 13:05 Hong Kong time, the Chinese Internet giant's share price was at HK$342.80, the lowest level in 10 months. The average target price of 51 analysts is 511.62 Hong Kong dollars. Although several analysts lowered their target prices last month, they are still about 50% higher than the current share price.
Tencent's share price has only fallen in two years since it entered the Hong Kong market 14 years ago. The stock climbed 114% in 2017 and hit a record high in January this year. However, its light then quickly dimmed, and the market value of the Shenzhen-based company evaporated about $160 billion. In addition to concerns about the entire technology industry, Tencent is vulnerable to the impact of the Hong Kong market as investors cut the risk exposure of the most fragmented and liquid stocks. And concerns about its falling profit margins have intensified.
JPMorgan Chase this week cut its target price by 4% to HK$480, saying that Tencent’s game revenue may be weak in the short term. JPMorgan Chase said in the report that after the second quarter results announcement, next year's performance prospects may improve.
Tencent is scheduled to release its earnings on August 15th, and analysts expect its second-quarter profit growth to fall to its lowest level since 2012. At least 11 institutions lowered their target prices for Tencent in July, including Credit Suisse Group and Morgan Stanley. Nonetheless, all 51 institutions tracked by Bloomberg maintained a recommendation to buy Tencent shares.