The NetEase, Inc. (NASDAQ:NTES) Full-Year Results Are Out And Analysts Have Published New Forecasts

The annual results for NetEase, Inc. (NASDAQ:NTES) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of CN¥103b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.8% to hit CN¥45.23 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for NetEase

Following the latest results, NetEase's 35 analysts are now forecasting revenues of CN¥115.2b in 2024. This would be a solid 11% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CN¥47.89, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥116.3b and earnings per share (EPS) of CN¥47.74 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$136. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values NetEase at US$158 per share, while the most bearish prices it at US$117. This is a very narrow spread of estimates, implying either that NetEase is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that NetEase's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.1% per year. So it's pretty clear that, while NetEase's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$136, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on NetEase. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple NetEase analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that NetEase is showing 1 warning sign in our investment analysis , you should know about...

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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.