Earnings Previews: Home Depot, iQIYI, Sea Limited, Tencent Music


Beijing-based online entertainment firm iQIYI Inc. (NASDAQ: IQ) has added more than 118% to its share price over the past 12 months. Most of the increase came in the last quarter of 2022; so far in 2023, shares are up about 9.7%.

At its recent conference in Beijing, the company said it will release 270 net titles in 2023, covering movies, TV dramas and variety shows, and other entertainment content. While most of its focus is on its Chinese audience, the Netflix-like company will be pushing for profits in its international markets as well.

Of 23 brokerages covering the stock, 14 have a Buy or Strong Buy rating and eight rate it at Hold. At a share price of around $5.80, the upside potential to the median price target of $8.53 is 47.1%. At the high target of $22.07, the upside potential is around 280%.

First-quarter revenue is forecast to rise by about 4.3% sequentially to $1.15 billion, essentially flat year over year. The company is expected to post EPS of $0.10, down 27% sequentially and up $0.03 per share in the year-ago quarter. For the full 2023 fiscal year, analysts expect EPS of $0.40, up from $0.22 per share last year, on revenue of $4.61 billion, up 9.8%.

The stock trades at 14.6 times expected 2023 EPS, 9.7 times estimated 2024 earnings of $0.40 and 8.1 times estimated 2025 earnings of $0.73 per share. The stock’s 52-week range is $1.65 to $7.99. The company does not pay a dividend, and the total shareholder return for the past year was 119.74%.

Sea Limited

Singapore-based Sea Limited (NYSE: SE) operates Asia’s leading online gaming and entertainment platform. Over the past 12 months, the stock has risen by about 47%, including a bump of nearly 62% so far in 2023. Since posting its 52-week low in early November, shares have more than doubled in value.

The company has succeeded in cutting costs and could post better-than-expected first-quarter results. Sea’s goals for the current year are growing its cash balance and boosting top-line and bottom-line growth. First-quarter results need to demonstrate that these goals are realistic.

Of 32 analysts covering the stock, 22 have a Buy or Strong Buy rating, and nine others have Hold ratings. At a share price of around $83.50, the stock’s implied upside based on a median price target of $98.00 is 17.4%. At the high price target of $159.00, the upside potential is 90.4%.

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