Benchmark has kept its Buy rating on NetEase (NASDAQ:NTES) and reiterated a $158.00 price target following the Chinese gaming group's fourth-quarter 2025 financial report. The decision aligns with a broader analyst consensus characterized as "Strong Buy" with an InvestingPro rating of 1.24, and InvestingPro data indicates the stock appears undervalued on its Fair Value assessment.
The quarter produced mixed results. NetEase reported an earnings per share (EPS) of 10.95 for Q4, well below the anticipated 14.12, representing a 22.45% negative surprise versus analyst expectations. Revenue for the period came in at 27.55 billion USD, short of the forecasted 28.71 billion USD. The revenue miss was attributed in the company report to softer performance in its online games segment.
Despite the near-term shortfall, several balance-sheet and operational indicators drew favorable attention from Benchmark and InvestingPro. NetEase’s trailing twelve-month revenue rose 6.96% to $16.1 billion, and deferred revenue climbed sharply to a multi-year high, a development Benchmark views as evidence of underlying momentum and better visibility into upcoming releases.
Financial stability is reflected in the company’s liquidity and leverage metrics. NetEase reported a current ratio of 3.45 and a debt-to-equity ratio of 0.04. InvestingPro analysis also notes that the company holds more cash than debt and assigns an "Overall Great" financial health score of 3.36.
Benchmark expressed confidence in the gaming outlook, pointing to resilient legacy franchises and solid retention from newer titles such as Where Winds Meet. The firm also highlighted a clearer development pipeline ahead of the anticipated Sea of Remnants launch, which is planned for the third quarter of 2026.
Shareholder returns were another point of emphasis. NetEase has delivered consistent dividend growth, registering a 24.25% increase and maintaining dividend payments for seven consecutive years.
On the technology front, Benchmark underscored NetEase’s ramping of artificial intelligence across development workflows and gameplay innovation. The analyst note referenced vertically integrated AI models, use of proprietary gaming data, and strong in-house development capabilities as strategic strengths that could help the company navigate industry transitions.
For investors seeking quantified research, InvestingPro points to a Pro Research Report that covers NetEase alongside more than 1,400 other stocks, and reiterates the company’s apparent undervaluation on its Fair Value metric.
Market participants are weighing the mixed signals: a substantial earnings and revenue miss in the quarter against rising deferred revenue, a strong liquidity position, continued dividend growth, and a stated acceleration of AI initiatives. Analyst firms have not yet publicly updated their ratings in response to the earnings report, leaving some near-term uncertainty about changes in consensus positions.
Takeaway - NetEase’s Q4 results present a mixed picture. Operationally, the quarter fell short of expectations; strategically and financially, the company displays markers of strength that underpin Benchmark’s decision to maintain a Buy rating and a $158.00 target.