PRX: Rising Earnings Visibility Will Narrow The Discount To Underlying Assets

The Prosus analyst fair value estimate has been raised from EUR 70 to EUR 80 as analysts highlight stronger revenue growth expectations and a modest re rating of future earnings multiples, despite slightly higher discount rates and some normalization in profit margins.

Analyst Commentary

Bullish analysts have recently adjusted their models to reflect a more constructive outlook on Prosus, with a series of upward price target revisions suggesting growing confidence in both the company’s earnings trajectory and balance sheet strength.

Bullish Takeaways

• Successive price target increases into the low to mid EUR 70s signal that bullish analysts see further upside from current levels, underpinned by improving visibility on core earnings and asset monetization.
• Recent upward revisions, even where modest in absolute terms, indicate that execution on cost discipline and portfolio optimization is tracking ahead of prior expectations, supporting a higher fair value range.
• Large step ups in target prices, such as the move from the high EUR 50s to the mid EUR 70s, reflect greater conviction in Prosus’s longer term growth algorithm, including contributions from its e commerce and fintech holdings.
• Maintained Overweight and Buy stances alongside higher targets suggest that, despite near term market volatility, analysts believe the risk and reward profile remains skewed to the upside as Prosus narrows the gap to its underlying asset value.

What's in the News

• Prosus has completed a major share buyback programme, repurchasing 985,402,795 shares, representing about 27.19% of shares outstanding for approximately $33.5 billion. This includes 87,498,363 shares bought between April 1 and September 30, 2025 for $4.6 billion (Key Developments).
• The company issued earnings guidance for the period ending September 30, 2025, forecasting earnings per ordinary share N from total operations of 58 to 75 US cents versus 187 US cents a year earlier. Earnings from continuing operations are expected to grow 28.1% to 37.0%, driven largely by Tencent and gains on Tencent share sales (Key Developments).
• Prosus launched a Brazilian Depositary Receipts programme on the B3 exchange under the ticker PRBX. The initiative aims to broaden its investor base and deepen engagement in the Brazilian market, building on its existing US ADR programme (Key Developments).
• The company announced a higher capital return and dividend package for the year ended March 31, 2025, including a 20 euro cents per share capital repayment for ordinary shares N, with an option to elect a cash dividend instead. It also laid out record, election, and payment dates across the JSE and Euronext Amsterdam (Key Developments).

Valuation Changes

• The fair value estimate has risen from €70 to €80 per share, reflecting stronger growth assumptions and a modestly higher valuation multiple.
• The discount rate has increased slightly from 6.64% to 6.78%, partially offsetting the impact of higher growth expectations on the valuation.
• Revenue growth has been revised up from 29.7% to 35.5%, indicating a more optimistic view on top line momentum across key assets.
• The net profit margin has been reduced from 107.9% to 87.3%, incorporating expectations of margin normalization from previously elevated levels.
• The future P/E has expanded from 12.2x to 13.8x, signaling a modest re-rating of Prosus’s earnings stream in the valuation model.