7 Most Undervalued Foreign Stocks to Buy According to Analysts

2) NetEase, Inc. (NASDAQ:NTES)

Forward P/E Ratio as of 10 October: 12.03x        

Average Upside Potential: 29.04%

Number of Hedge Fund Holders: 35

NetEase, Inc. (NASDAQ:NTES) operates as a leading internet technology company offering online services such as content, community, communication, and commerce.

Wall Street analysts expect that NetEase, Inc. (NASDAQ:NTES)’s long-term growth trajectory is expected to be supported by strong brand, user loyalty, and customer retention. In the recent earnings call, the company highlighted the success of its games, which includes Once Human and Naraka: Bladepoint Mobile, and their expansion throughout genres and platforms. Also, AI integration in game development resulted in the 200% YoY growth in AI-driven subscription services.

Wall Street expects that ongoing collaboration with Blizzard should yield future cooperation. NetEase, Inc. (NASDAQ:NTES) remains optimistic regarding the upcoming launches of Where Winds Meet and Marvel Rivals. The company continues to explore different genres in a bid to develop games suitable for the global market. NetEase, Inc. (NASDAQ:NTES) remains well-positioned for continued growth with a strong emphasis on AI technology and a diverse gaming portfolio. Moving forward, the development of new titles should help achieve future successes.

The robust R&D and operating capabilities built over the past 2 decades led to the formidable games portfolio of newer innovative hits, diversifying its offerings. The gross profit margin for games and related value-added services for Q2 2024 came in at 70.0% as compared to 69.5% and 67.4% for the preceding quarter and the same quarter of 2023, respectively. The QoQ and YoY increases were primarily because of changes in the product mix.

As per Wall Street analysts, the shares of NetEase, Inc. (NASDAQ:NTES) have an average price target of $110.18. Polen Capital, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:

“NetEase, Inc. (NASDAQ:NTES) is one of the top players in China’s video game industry and saw decent revenue growth in 2023, particularly in its games division, with profit growth close to 20%. The stock also continues to recover after gaming restrictions announced last quarter in China were not nearly as bad as first feared.”