On Monday, JPMorgan (NYSE:JPM) changed its stance on Bilibili Inc . (NASDAQ:BILI), upgrading the stock from Underweight to Neutral and adjusting the price target to $11 from the previous $10. The revision reflects a reassessment of the company's risk and reward balance, as the analyst believes that the market's expectations are now more aligned with the company's revenue growth targets for the year.
The upgrade comes after Bilibili management set a double-digit revenue growth target for 2024, which is consistent with the consensus forecast of a 14% year-over-year increase. This alignment suggests there may be limited need for forecast adjustments in the near term. Bilibili's performance in new game pipelines and live streaming will be pivotal to achieving this growth, especially as they face increased competition in the game streaming market.
Bilibili is anticipated to begin a new cycle of game launches starting in the second quarter of 2024, with major titles such as "Three Kingdom" and "Heaven Burns Red". These releases are expected to help reaccelerate game revenue. The company has also seen an improvement in its financial position, having reported positive operating cash flow in the third and fourth quarters of 2023.
Furthermore, Bilibili has set a target to reach non-GAAP operating profit breakeven by the third quarter of 2024. These factors contribute to the analyst's view that the downside for Bilibili's share price is limited over the next three to six months. Additionally, if the new games perform better than expected, there could be potential for the stock to outperform.
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