Goldman Sachs raises Bilibili's target price to 240 yuan, driven by next year's new product pipeline boosting potential upside in gaming business

Goldman Sachs released a report stating that Bilibili-W (09626.HK) (commonly known as B Station) strengthened the bank's current investment view on B Station after its third-quarter performance and management sharing. B Station is maintaining a quality content ecosystem, has strong user engagement, and is monetizing traffic through better advertising conversion and AI technology. Additionally, the new game product pipeline expected next year is likely to drive potential business upside. The rating is maintained at "Buy," with the target price for H shares raised from HKD 234 to HKD 240, and the target price for Bilibili (BILI.US) in the US stock market raised from USD 30 to USD 30.8.

The bank slightly adjusted its revenue forecasts for 2025 to 2027 to reflect better-than-expected advertising and other revenues, raising this year's non-GAAP earnings estimate by 5%. However, it lowered the non-GAAP earnings estimates for the next two years by 3% to 4% to account for higher R&D expense forecasts stemming from its own games and AI-related initiatives.

The report mentioned that after the third-quarter performance announcement, the stock price slightly weakened, likely due to weaker-than-expected game outlook for the fourth quarter. However, the bank maintains a constructive view on B Station, as advertising growth has upside potential (one of the fastest among peers); and benefiting from operating leverage and disciplined cost control, gross margins are expected to expand, with operating profit margins moving towards a mid-term target level of between 15% and 20%