Morgan Stanley on Tencent Music Entertainment Group (TME): 'Competition looks not to be an issue'

Morgan Stanley analyst Yang Liu reiterated an Overweight rating and $27.50 price target on Tencent Music Entertainment Group (NYSE: TME).

The analyst comments "Competition looks not to be an issue for TME. We believe the higher investment in concerts and merchandise is the right direction in the long term, though it will dilute margin and require a bit more patience in the near term. What's changed: Our 2025 net profit forecast rises 2% with the profit beat, but we trim 2026e and 2027e net profits 2%, to Rmb10.8bn and Rmb12.3bn, owing to the higher investment. We roll our DCF forward to September 2027 and keep our price target unchanged at US$27.5. Despite some short-term pressure on margin, we think the investment is the right direction to unlock upside from the high-end music market and generate returns in the long run. Stay OW."

For an analyst ratings summary and ratings history on Tencent Music Entertainment Group click here. For more ratings news on Tencent Music Entertainment Group click here.

Shares of Tencent Music Entertainment Group closed at $20.75 yesterday.

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