Global Alpha – BUY Tencent Music TME:NYSE

Insights 🔍

• Strong Buy consensus: 30 Buy, 2 Hold, 0 Sell ratings.
• Upside average: +17.4% (analyst target), with the broad target range from $13.04 to $19.17.
• Recent momentum: Shares are up nearly 28% year-to-date and trade just below their 52-week high of $15.77.
• Recent earnings beat: Q1 EPS and revenue both topped estimates, prompting multiple price target hikes.
• Broker highlights: Jefferies, Morgan Stanley, Barclays, Macquarie, and JPMorgan all reaffirm “Buy” or “Overweight” with targets clustered around $16–$17.
• Benchmark bullishness: Sets the street-high target at $19, seeing TME as a top China ADR mid-cap pick.

With robust cash, profit growth, and a rare lack of Sell ratings, brokers see further upside if subscriber growth and monetization improve.

Narrative: Broker & Analyst View

Wall Street mood: The analyst crowd is firmly bullish. Major brokers—Jefferies, Morgan Stanley, Barclays, Macquarie, and JPMorgan—recently raised their targets, all echoing confidence in TME’s business model and strategic investments in global music giants. The most aggressive, Benchmark, sees potential for TME to break through $19 per share, citing a mix of subscriber growth, margin gains, and new product innovation.

Bear case: The main concern is that TME is trading near its 52-week high, and organic user growth slowed after dialing back aggressive promotions. There’s also some caution around long-term average revenue per paying user (ARPPU) stability as competition heats up.

Bull case: On the flip side, earnings beats, recurring analyst upgrades, and a strong balance sheet (more cash than debt) make for a compelling setup. Gross margins and online music revenues are expanding fast, with analysts highlighting the potential for further improvement as TME leverages self-developed content and AI-powered offerings.

Global contrast: TME’s strong analyst support mirrors the optimism seen in U.S. streaming leaders, but the China ADR discount still lingers—offering a potential catch-up trade if sentiment shifts.