Bilibili Inc . (NASDAQ:BILI) was cut to Neutral from Buy at UBS on Monday, with analysts lowering the firm's price target on the stock to $13.20 from $22 per share.
While analysts said the company is still the "go-to Gen Z online video platform," and the firm's long thesis remains unchanged, they also stated that the stock lacks near-term catalysts.
"We still see structural upside in Bilibili's monetisation as it penetrates deeper into online transactions, especially e-commerce, and UBS Evidence Lab survey suggests Bilibili's user base is receptive to further monetisation," explained the analysts. "That said, we do expect near-term pain as Bilibili revamps game strategy: cutting back investment in R&D and focusing more on game distribution."
"This would mean a lighter game pipeline and slower game growth in the near term, though we think this is the right long-term move. With Double
11 behind us and Q1 being the typical low season for ads, we see a lack of near-term positive catalysts," they added.
The analysts stated they would likely turn more positive on the stock when China's macro meaningfully recovers, to which Bilibili's ads are highly sensitive.