Nomura reiterates its Buy rating for Tencent Music Entertainment. The firm reduced its price target from $26.00 to $12.50.
Management lowered fiscal year 2026 subscription revenue guidance by 6%. Sector competition concerns also influenced the adjustment.
The stock corrected 43% since the beginning of the year. TME underperformed Chinese internet peers.
Nomura describes the current valuation as not demanding. The stock trades at a discount with a 10.5 forecast price-to-earnings ratio for fiscal year 2026. Chinese internet peers average a 15 price-to-earnings ratio.