Tencent Music Entertainment Group Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders might have noticed that Tencent Music Entertainment Group (NYSE:TME) filed its first-quarter result this time last week. The early response was not positive, with shares down 7.2% to US$8.60 in the past week. The result was positive overall – although revenues of CN¥7.9b were in line with what the analysts predicted, Tencent Music Entertainment Group surprised by delivering a statutory profit of CN¥1.34 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the current consensus from Tencent Music Entertainment Group’s 28 analysts is for revenues of CN¥35.6b in 2026. This would reflect an okay 6.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 4.7% to CN¥5.89. In the lead-up to this report, the analysts had been modelling revenues of CN¥36.1b and earnings per share (EPS) of CN¥6.01 in 2026. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

See our latest analysis for Tencent Music Entertainment Group

It might be a surprise to learn that the consensus price target fell 9.4% to US$16.02, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Tencent Music Entertainment Group analyst has a price target of US$29.29 per share, while the most pessimistic values it at US$10.01. This is a very narrow spread of estimates, implying either that Tencent Music Entertainment Group is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Tencent Music Entertainment Group’s rate of growth is expected to accelerate meaningfully, with the forecast 8.7% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 0.2% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 8.3% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Tencent Music Entertainment Group is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Tencent Music Entertainment Group going out to 2028, and you can see them free on our platform here.

We also provide an overview of the Tencent Music Entertainment Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.