By Esha Dey
$Tencent(00700.HK)$ has been added to$Goldman Sachs Group(GS.US)$'s conviction list. Analysts cited the company's committed investments toward long-term growth and underperformance this year.
Tencent ($TENCENT HLD ADR(TCEHY.US)$) is listed as an ADR on the U.S stock exchange.
The Goldman Sachs conviction buy list is a list of stocks that analysts expect to outperform the market in the near future. The conviction buy list is ongoing. Analysts from Goldman Sachs continuously add and remove stocks from the list as market conditions shift.
Goldman changed its 12-month price target to HK$759 (approximately $97.56) from HK$906 (approximately $116.45);
However, Goldman also lowered 2021-2023 revenue estimates by 3%-5%, mainly on tightening regulations on content, ads, and Fintech, as well as delayed launching timeline of blockbuster games
Tencent has 63 buys, 4 holds, 1 sell; avg PT HK$733 (approximately $94.22)
What is high conviction?
Goldman Sachs keeps two factors in mind when building their buy list:
The size of the stock's potential return.
The likelihood of the stock to realize that return.
With that in mind, a stock with a high conviction has both a large potential return and a likely chance to realize that return.
Are conviction stocks good for investors?
Conviction stocks can be good for investors who are already holding the position in question.
To contact the reporter on this story:
Esha Dey in New York at edey@bloomberg.net