YY Can Sustain Its Leadership Position; Goldman Initiates At Buy

Courtesy of Benzinga.

Goldman Sachs’ Fan Liu initiates coverage of China-based YY Inc (ADR) (NASDAQ: YY) Thursday with a Buy rating and $101 price target as the company has proven itself to be a “pioneer” in live streaming.

YY’s dominance in live streaming dates back to the PC era, but as the industry shifted away from desktop devices, the company built an ecosystem, Liu commented. The company’s premium content and vertical expansion into outdoor activities and other areas merely adds to the case for owning the stock.

YY Live and its Huya subsidiary both stand to benefit from ongoing improvements in user engagement and retaining, the analyst continued. In fact, the two different platforms have gained a reputation of offering new version updates every three weeks.

Being Bullish On YY

Meanwhile, YY recently completed the necessary financing to either: 1) improve its product portfolio, 2) better target new users, and 3) expand oversees through its own internal development or through an equity investment in an international firm.

Finally, the analyst is bullish on YY’s margin visibility outlook, mostly driven by Huya which is expected to see break even next year. This will help YY generate a 27-percent revenue compounded annual growth rate through 2019 and a 33-percent earnings compounded earnings growth over the same time period.

At time of publication, shares of YY were up 3.88 percent at $73.85.

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