Rating Quick Look | Tencent, Google Target Prices Raised! Tesla, Meta Face Price Cuts!

Haitong International: Tesla's target price lowered from $252 to $216.6, maintains "outperform" rating

The bank pointed out that Tesla's first-quarter revenue fell by 9% year-on-year to $16.46 billion, affected by average selling price, annual decrease in vehicle deliveries, and exchange rate impact. The quarterly operating profit margin fell by 5.92 percentage points year-on-year to 5.5%, non-GAAP net profit fell by 48% year-on-year to $1.54 billion, interest rate fell by nearly 2 percentage points to 17.4% year-on-year, and also fell by 0.2 percentage points quarterly. Operating cash flow at the end of the first quarter was $200 million, with free cash flow at a negative $2.53 billion.

The report also indicated that the company expects sales growth to slow down. According to the new car model cycle timetable that extends to 2025, it is expected that vehicle deliveries in the next two years will be 1.846 million and 2.289 million units, a reduction of 18% and 20% from previous forecasts. The company is expected to continue lowering prices to boost sales, and cost reduction efforts are expected to stabilize gross profit margins.

The bank forecasts earnings per share for 2024 to 2026 to be $2.81, $3.61, and $4.85 respectively, but still lower by 33%, 45%, and 37% from previous forecasts. The bank stated that due to the company's undisputed leading position in new energy vehicles, a certain valuation premium is given.

UBS: Meta's target price lowered from $610 to $575

The bank noted that Meta's first-quarter performance exceeded expectations, with revenue reaching $36.5 billion, 2% higher than the bank's and market expectations; GAAP earnings per share of $4.71, 6.1% and 8.5% higher than the bank's and market expectations.

The bank believes that the company's downside risk is limited, and has lowered its GAAP earnings per share forecast for 2025 and 2026 by 5% and 7%, mainly due to upward revisions in operating expenses and capital expenditures. The company is intensifying its investment in artificial intelligence-related infrastructure, believing it can bring more value to its long-term business.

Morgan Stanley: Alphabet's target price raised from $165 to $195

Jefferies: Alphabet's target price raised from $180 to $200

Citi: "Buy" rating for Alphabet, target price $168

The report stated that Google's parent company Alphabet's first-quarter performance exceeded market expectations. The company recorded revenue of $80.5 billion (up 16% year-on-year excluding foreign exchange), about 2% higher than market expectations, with operating income of $25.5 billion, approximately 15% higher than market expectations, and GAAP earnings per share of $1.89, also higher than the market's expected $1.51.

The report highlighted the growth in search business revenue, which accelerated by about 170 basis points to a year-on-year increase of 14.4% due to improvements in the online advertising environment, outperforming expectations. YouTube revenue increased by 20.9% year-on-year, about 5% higher than market expectations, while Google Cloud revenue accelerated by about 270 basis points to 28.4% year-on-year growth.

The bank noted that Google services achieved an operating profit margin of 39.6%, an increase of about 450 basis points from the same period last year, while the cloud profit margin was 9.4% (up 680 basis points) It is important to note that Google announced a cash dividend of $0.20 per share and expanded its share repurchase program to approximately $70 billion.

UBS: Raises Tencent Holdings' Target Price to HKD 438

The report states that the recovery of overseas gaming business seems to be overlooked by investors. Citing industry data, it is expected that Supercell, a Finnish mobile game company acquired by Tencent in the early years, will see a growth recovery in the first quarter of this year with an estimated revenue increase of 82%. As Supercell contributes about 10% of Tencent's gaming revenue, it is expected to directly benefit Tencent's growth. Additionally, the overseas revenue of its popular game "PlayerUnknown's Battlegrounds" has been increasing since the second half of last year, with a projected year-on-year growth of 34% in the first quarter. UBS anticipates a positive performance in the international gaming market, which will support a significant improvement in the company's performance.

The bank also mentioned that besides the launch of the mobile game "Dungeon & Fighter", the potential rebound in the performance of existing games could bring upward momentum. Tencent's transformation of existing games based on the WeChat ecosystem, as well as the monetization driven by future artificial intelligence technology applications, are expected to enhance the visibility of Tencent's profit growth.

Morgan Stanley: Maintains "Overweight" Rating on Xiaomi Corporation-W, Target Price at HKD 20

The report indicates that as of April 24th, confirmed new orders have exceeded 75,723 units, higher than the 70,000 units on April 20th. This suggests that despite the longer delivery time, the momentum of new orders is strong. After visiting Xiaomi's electric vehicle factory in Beijing, Morgan Stanley stated that the factory is highly automated, equipped with advanced production equipment and production operation systems. The bank believes that this is an important factor supporting the good quality of the SU7 and the rapid increase in production capacity