JPMorgan bullish on JOYY (JOYY.US): target price $98, gives "Overweight" rating

According to Wisdom Financial News APP, international investment bank J.P. Morgan recently released its latest research report, assigning an "Overweight" rating to the world's leading technology company JOYY Inc. (JOYY.US) with a target price of $98. Based on the closing price of $74.16 on August 12, the target price implies an upside potential of approximately 32%.

The report points out that since January 2025, JOYY's stock price has significantly outperformed the KWEB index (JOYY up 101%, KWEB up 6%). The bank believes that the performance is attributed to two key factors: substantial shareholder returns and robust growth of the BIGO Ads advertising business, both of which are expected to jointly drive the company's stock price upward.

Annualized Shareholder Return of Around 15%, Sufficient Cash Reserves Support Sustainable Long-term Payout

The report highlights JOYY's shareholder return policy. Data in the report shows that since 2020, JOYY has distributed more than $2 billion to shareholders, accounting for over 50% of the company’s current total market value. In 2025, the company plans to return a total of $332 million to shareholders through cash dividends and share buybacks, which represents 9% of its market cap. In May 2026, JOYY updated its shareholder return plan, aiming to complete a total return of $1.5 billion to shareholders by the end of 2028, with 60% distributed as quarterly dividends and 40% used for share repurchases. J.P. Morgan estimates that this plan "implies an annual shareholder return of 15% per year."

The research report notes that what supports this sustainable return is the company’s ample net cash reserves and strong cash flow generation capacity. J.P. Morgan expects free cash flow of $220 million in 2026 and $317 million in 2028. Based on this, analysts believe JOYY will have adequate capital to sustain shareholder returns beyond 2028, and further estimate that even if the stock price rises 50% from current levels, the company can still achieve a 10% annualized shareholder return.

BIGO Ads Revenue Grows More Than Fivefold, Industry Expansion and Data Advantages Highlight Growth Potential

On the business front, J.P. Morgan gives high marks to BIGO Ads' growth prospects.

The report shows that BIGO Ads revenue has increased more than fivefold since 2023 and continues to grow rapidly, with a 56% year-on-year increase in Q1 2026. Meanwhile, Mobvista and AppLovin’s relevant businesses grew by 33% and 59% respectively during the same period, indicating that the global open internet programmatic advertising market remains robust. J.P. Morgan believes that, with ongoing industry expansion and BIGO’s own data and algorithm strengths, BIGO Ads revenue will achieve a 39% compound annual growth rate from 2027 to 2028, driving the company's overall net profit and operating profit to increase by 19% and 30% year-over-year, respectively.

J.P. Morgan also points out that BIGO Ads’ proprietary data in the verticals of digital entertainment (Likee/Bigo Live) and e-commerce (SHOPLINE) provides a differentiated data foundation for its advertising models, which also gives BIGO Ads a strategic edge in growth. Furthermore, with continuous algorithm optimization and improved advertising efficiency, BIGO Ads is expected to further enhance monetization efficiency while maintaining strong ROAS for advertisers, thereby boosting profits for the advertising segment and the group as a whole.

The report states that BIGO Ads has formed a self-reinforcing virtuous growth cycle: expanding traffic generates more user data, which in turn optimizes AI models, brings higher advertiser returns, attracts more ad budget, and further drives traffic growth.

Based on this logic, J.P. Morgan applies a Sum-of-the-Parts (SOTP) valuation method, giving JOYY a target price of $98. The digital entertainment business is valued at 6x 2027E P/E and BIGO Ads at 1x 2027E P/S, higher than Mobvista’s comparable 0.7x ratio. J.P. Morgan believes this premium reflects BIGO Ads’ faster growth. At the same time, the company’s ample net cash is an important valuation support, accounting for 64% of the total SOTP valuation. In summary, J.P. Morgan’s research report concludes that the core bullish logic for JOYY is as follows: the current shareholder return plan corresponds to about 15% annualized return, its ample net cash and robust cash flows support sustainable long-term shareholder returns, and BIGO Ads, with its differentiated data and algorithm advantages in the rapidly growing programmatic advertising market, is becoming the company’s new growth engine.