NTES shares struggled in 2018
Video game stocks had a horrible 2018, and it's continued into 2019, illustrated in part by the demise of Call of Duty maker Activision Blizzard (ATVI). However, Barclays believes it's found a potential bright spot in the space, calling attention to Chinese tech firm NetEase Inc (NASDAQ:NTES), which makes a number of mobile games. The brokerage firm upgraded NTES to "overweight" from "equal weight," and lifted its price target to $300 from $270, predicting tailwinds from the release of "Diablo Immortal" later this year, a game it's co-developing with ATVI.
To be sure, NTES shares weren't saved from the sector bloodbath of 2018, falling from a late-2017 peak of $377.64 to as low as $184.60 in September. They are now testing potential resistance from the 50-week moving average and the $259 area, which is roughly a 38.2% Fibonacci retracement of the fall from their record peak to their September low. At last check, the security was down 1.2% at $240.59.
Most covering analysts are already bullish on NetEase, with eight of the nine recommending it as a "buy" or "strong buy." The average 12-month price target is up at $291.66. Sentiment seems bullish at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), as well, where call buying has easily outpaced put buying in the last two weeks.