JPMorgan initiated coverage on Momo Inc (ADR) MOMO with Overweight rating and $26 price target.
According to the analysts, mobile broadcasting drives top-line growth and profitability improvement. They view Momo as naturally suitable to host live broadcast activities, as demonstrated by the ramp-up of live broadcasting revenue since 1Q16.
The following reasons were provided by the analysts to support this view:
- The purpose behind live broadcasting fits well with Momo's user base (killing time).
- User acquisition costs and revenue sharing fees (to performers) are low due to an established user base.
The analysts expect live broadcasting revenue to reach US$214 million/US$418 million in 2016/17, representing 54 percent/61 percent of total revenue.
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