UBS Reiterates NetEase.com (NTES) Buy Rating

UBS analyst Gary Ngan maintained a Buy rating for NetEase.com, Inc. (Nasdaq: NTES), as well as a price target of $44.

The UBS analyst noted that although NetEase.com profits beat the consensus estimate by 10%, they were in-line with UBS estimates.

NetEase.com licenses World of Warcraft in China from Activision Blizzard (Nasdaq: ATVI) unit Blizzard Entertainment.

NetEase.com doesn't disclose World of Warcraft's numbers but Ngan believes the game produces margins of 44%.

"We are reviewing our estimates but we note 3 positives: 1) WoW is already outperforming its previous peak and and the launch of WoLK expansion will drive up its revenues further; 2) advertising has rebounded significantly; 3) pipeline for 2010 looks encouraging. We also note 3 concerns/ uncertainties: 1) margin for WoW is lower than expected, 2) FWJ’s declining trend is clear, 3) timing for launch of WoLK is still uncertain pending further approval."