On Monday, Bernstein Group maintained its Market Perform rating on shares of Bilibili (NASDAQ: NASDAQ:BILI) with a steady price target of $18.00. According to InvestingPro data, the stock has shown remarkable momentum with a 56.78% gain year-to-date, despite recent volatility. Six analysts have revised their earnings estimates upward for the upcoming period.
The firm's analyst highlighted Bilibili's unexpected performance this year, largely attributed to the success of its Three Kingdoms strategy game. However, with the peak billings for the game now in the past and the company's fourth-quarter ad growth falling short of consensus expectations, Bilibili's shares have experienced a recent downturn.
The analyst pointed out that Bilibili is trading at approximately 22-25 times its projected 2025 earnings and 15-20 times its estimated 2026 earnings. These valuations are based on reasonable forecasts for an increase in operating margins. With a current market capitalization of $7.93 billion and a price-to-book ratio of 4.2, InvestingPro's comprehensive analysis suggests the stock is currently trading near its Fair Value.
Discover more insights with InvestingPro's detailed Research Report, available for over 1,400 US stocks. Despite this, the firm finds it challenging to recommend Bilibili's stock due to the existence of cheaper, higher-quality investment alternatives in the market.
The resilience of the Three Kingdoms game's billings was likened to the risky behavior described in Nassim Taleb's metaphor of "picking up pennies in front of a steamroller." Bernstein anticipates limited earnings growth for Bilibili from 2024 to 2026, as the company faces the challenge of surpassing this year's peak in gaming revenues.
The company's revenue grew 14% in the last twelve months, though InvestingPro analysis indicates the company remains unprofitable, with a negative EBITDA of $71.17 million.
The analyst also drew a comparison with Kuaishou, a company that has previously demonstrated how the transition from revenue to earnings-based valuations can lead to volatility. Taking all factors into account, Bernstein has opted to maintain a neutral stance on Bilibili's stock.
In other recent news, Bilibili, a leading online entertainment platform in China, has reported significant financial results, surpassing expectations. The company's revenue exceeded Wall Street's forecasts by 3%, and its operating income was 40% higher than anticipated, mainly due to a stronger-than-expected yield from gaming operations. Bilibili also reported a positive non-GAAP Operating Profit Margin for the first time.
Analysts from Mizuho (NYSE:MFG) Securities, Benchmark, and Barclays (LON:BARC) have upgraded their stock price targets for Bilibili following these robust results. Mizuho Securities increased the stock's price target from $21.00 to $22.00, retaining an Outperform rating. Benchmark raised the stock price target to $24 from the previous $16, while keeping a Buy rating. Similarly, Barclays maintained an Overweight rating and raised the price target to $24.00 from $19.00.
These revisions come after Bilibili's successful third quarter, with revenues surpassing estimates by 2% and operating income outperforming forecasts by over 40%. The company's advertising revenue, which showed a 28% year-over-year increase, was highlighted as a standout performer. Bilibili's financial health is also improving, with the firm reporting a profit for the first time and projecting continued margin improvements.
In addition, Bilibili announced a share repurchase program valued at up to $200 million over the next 24 months, reflecting its confidence in its financial stability and commitment to delivering value to its shareholders. The company reported a 26% year-over-year increase in total revenue, reaching RMB 7.3 billion, largely due to an 84% rise in gaming revenue.
Bilibili's community engagement metrics also surged, with daily active users reaching 107 million and monthly active users hitting 348 million. These recent developments underscore Bilibili's robust financial performance and strategic focus on enhancing user engagement and shareholder value.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.