Morgan Stanley: Downgrade Bilibili, Inc. Sponsored ADR Class Z (BILI.US) target price to $27, reiterate "Overweight" rating.

Morgan Stanley has released a research report stating that it maintains an "Overweight" rating for Bilibili, Inc. Sponsored ADR Class Z (BILI.US, 09626), with the target price for its U.S. stock lowered from $31 to $27. The firm has adjusted its 2026 to 2028 earnings per share forecast down by 3%, 9%, and 4%. Morgan Stanley pointed out that Bilibili, Inc. Sponsored ADR Class Z's gaming business is about to enter a harvest period, with multiple new games set to launch in the next 15 months. On the other hand, although the advertising business is impacted by macro headwinds, it can still maintain leading growth in the industry. Management guidance indicates that online advertising revenue is expected to grow by about 20% year-on-year in the third quarter, and anticipates that the full-year growth rate will be similar year-on-year, suggesting that the growth rate in the fourth quarter will slow to high double-digit levels. Gaming business revenue is expected to remain flat quarter-on-quarter in the third quarter and turn positive year-on-year in the fourth quarter.