Is There Now An Opportunity In NetEase, Inc. (HKG:9999)?

Let's talk about the popular NetEase, Inc. (HKG:9999). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on NetEase’s outlook and valuation to see if the opportunity still exists.

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What's The Opportunity In NetEase?

According to our valuation model, NetEase seems to be fairly priced at around 2.98% above our intrinsic value, which means if you buy NetEase today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth HK$229.76, there’s only an insignificant downside when the price falls to its real value. Furthermore, NetEase’s low beta implies that the stock is less volatile than the wider market.

View our latest analysis for NetEase

What kind of growth will NetEase generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. NetEase's earnings over the next few years are expected to increase by 27%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 9999’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 9999, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for NetEase from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in NetEase, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.