爱奇艺：4Q25 review: total revenue recovered on improving content performance-20260227

Investment Rating - The report maintains a "BUY" rating for iQIYI, indicating a potential return of over 15% over the next 12 months [17]. Core Insights - iQIYI's total revenue for 4Q25 grew by 3% YoY to RMB6.79 billion, aligning with Bloomberg consensus estimates. The non-GAAP net income was RMB110 million, a significant improvement from a net loss of RMB59 million in 4Q24, exceeding the consensus estimate of RMB68 million [1]. - The forecast for total revenue in 1Q26 is expected to decline by 13% YoY and 8% QoQ to RMB6.28 billion due to adjustments in content strategy and reduced content distribution to other channels, leading to a decrease in content distribution revenue [1]. - The target price for iQIYI has been lowered to US$2.00, based on an 18x multiple of the 2026E non-GAAP EPS, down from a previous target of US$2.75 [1][12]. Financial Performance Summary - For FY26E, total revenue is projected at RMB26.9 billion, reflecting a decline of 1.4% YoY, with adjusted net profit expected to be RMB750.7 million [2]. - The gross margin is anticipated to improve to 22.1% in FY26E, while the non-GAAP operating margin is expected to decline to -0.8% in 1Q26E due to operating deleverage [10]. - Membership services revenue in 4Q25 was RMB4.1 billion, remaining stable YoY after seven consecutive quarters of decline, attributed to improved content performance [9]. Market Position and Competitive Landscape - iQIYI ranked first in viewership market share in the 2025 Enlightent Data TV series annual ranking, supported by five titles that exceeded a popularity score of 10,000 [9]. - The company has made progress in emerging businesses, with overseas membership revenue growing over 40% YoY in 2H25 and the launch of its first iQiyi Land in February 2026 [9]. Valuation Metrics - The current market capitalization of iQIYI is approximately US$1.648 billion, with a current price of US$1.71, indicating a 17% upside to the target price [3][4]. - The average P/S ratio is maintained at 0.4x across the forecast period [2].