Benchmark reaffirmed a Buy rating and $158 price target on NetEase after Q1 results.
NetEase's revenue and earnings beat estimates, driven by legacy franchises, overseas growth, and titles like Fantasy Westward Journey.
Revenue grew 6.96% over twelve months, with a gross margin of 64.29%, showing operational efficiency.
Benchmark sees structural margin expansion from higher PC and cross-platform mix, improved leverage, and lower channel costs.
NetEase integrates AI tools across development to boost productivity and innovation.
The outlook remains positive with a strong pipeline led by Sea of Remnants. NetEase trades at a P/E of 14.08, considered undervalued.
