Citi raises Bilibili stock target, maintains neutral stance

Today, Citi updated its outlook for leading online entertainment platform Bilibili (NASDAQ: ). The price target on the company's stock has been raised to $13.50 from the previous price of $12.50. Despite this adjustment, the company decided to maintain a Neutral rating on the stock.

The revision comes ahead of Bilibili's expected first-quarter 2024 results in mid-May. Citi analysts expect both revenue and profit to be in line with consensus. Advertising revenue is expected to continue to be the main growth driver, with annual growth expected to be 28%. This rise is attributed to good comparisons and strong performance in specific industries such as gaming. However, activity in the gaming space itself is expected to be weak due to the scarcity of new game releases.

Looking ahead, analysts expect advertising momentum may slow slightly due to more challenging comparisons. At the same time, gaming revenue is expected to rebound starting in the third quarter of 2024, which may be stimulated by the launch of new games in the middle of the year. Benefiting from enhanced operating leverage and effective cost control measures, Bilibili expects to achieve operating profit and loss balance in the third quarter of 2024.

In light of these expectations, Citi adjusted its revenue forecast and raised its operating margin forecast from 2024 to 2026. This represents an increase of -5.5%, +1.8% and +3.8% from the previous forecast. These adjustments reflect the expected benefits of the company's cost control strategy.

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The report finally reiterated Bilibili's neutral/high risk rating, with an expected revenue compound annual growth rate (CAGR) of 10% from 2023 to 2025.

Investment Professional Insights

As Bilibili (NASDAQ: BILI ) prepares to report first-quarter 2024 results, InvestingPro insights provide a deeper look into the company's financial health and market position. Bilibili has a market capitalization of $5.29 billion and holds more cash than debt on its balance sheet, indicating its financial stability. This is a key factor for investors to consider the company's growth prospects and operating strategies. While analysts don't expect to make a profit this year, Bilibili's shareholder yield is considered high, which could be attractive to investors looking for a company with the potential for capital returns.

InvestingPro data shows that Bilibili's revenue increased slightly by 2.87% in the past 12 months as of the fourth quarter of 2023. challenge. As a well-known player in the entertainment industry, Bilibili's strategic focus on advertising and games may affect future results, especially considering the launch of new games in the second half of 2024.

For those looking to dive deeper into Bilibili's financial health and future prospects, InvestingPro provides additional insights and indicators. There are also six InvestingPro Tips available, providing a comprehensive analysis of Bilibili's prospects.Interested readers can use the discount code PRONEWS24 Annual or bi-annual Pro and Pro+ subscriptions receive an additional 10% discount, giving them access to valuable investment tools and data to inform their decisions.

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