UBS has issued its first coverage report on JOYY Inc. (JOYY.US), assigning a "Buy" rating with an 80 USD price target. The bank believes that as the company completes its valuation reset through enhanced shareholder returns in 2025, market focus is expected to shift gradually from "high shareholder returns" to "fundamental growth," potentially driving a new round of value reassessment for the firm.
UBS notes emerging signs of stabilization and recovery in JOYY's core business fundamentals. The bank forecasts that the company's revenue and adjusted operating profit will increase by 10% and 13% year-over-year, respectively, in 2026. While the core live-streaming business is showing stability, new growth engines, particularly AI-driven programmatic advertising, are opening up additional expansion opportunities.
UBS expresses particular optimism about the development potential of JOYY's advertising business. The report indicates that JOYY first disclosed BIGO Ads revenue breakdown in the third quarter of 2025, with this segment accounting for approximately 22% of total revenue and demonstrating accelerating growth rates of 33% and 62% year-over-year in the third and fourth quarters of 2025, respectively. UBS highlights several structural growth drivers for programmatic advertising, including increased advertiser budgets due to improved ad placement efficiency, a shift of advertising budgets toward performance-based ads, and profit concentration within the programmatic advertising platform ecosystem.
The bank further suggests that BIGO Ads' growth advantages primarily stem from its first-party traffic base and early-mover position in non-gaming verticals. As advertising revenue contribution increases, business transparency improves, and the company provides more detailed segment disclosures starting from the first quarter of 2026, the advertising business is expected to become a significant factor in driving JOYY's valuation higher.
Beyond advertising, UBS views the live-streaming segment as a stable "cash cow" for JOYY. The report indicates that the company is increasingly focusing on high-quality growth, evidenced by continuous operational optimization, concentration on developed markets and user engagement, and AI-driven improvements in monetization efficiency. Since the second quarter of 2025, JOYY has resumed quarter-over-quarter revenue growth, reflecting the gradual effectiveness of operational enhancements and laying a foundation for future steady expansion.
Regarding profitability and cash flow, UBS projects that JOYY will achieve a 14% compound annual growth rate in EBITDA from 2025 to 2027. With capital expenditures remaining manageable, the company is expected to consistently generate 250 to 300 million USD in free cash flow, providing support for shareholder returns.
UBS arrived at its 80 USD price target using a sum-of-the-parts valuation methodology, cross-verified with a discounted cash flow analysis. The bank notes that JOYY's current stock price implies approximately 10 times projected 2026 earnings, presenting an attractive risk-reward profile. As profit recovery progresses and market recognition grows regarding AI-enhanced advertising growth, further upside potential for valuation exists. Additionally, UBS believes that JOYY's current "near-net-cash" valuation status, combined with an approximate 11% shareholder return rate (7% dividend yield plus 4% share repurchase rate), offers some downside protection for the stock price.