Morgan Stanley has cut Bubble Mart's target price by 13%, citing pressures due to a high base and other factors.

Morgan Stanley has lowered the target price for Pop Mart from HKD 247 to HKD 214, citing high base pressure in the second half of the year and a significant slowdown in overseas sales. Analysts Dustin Wei and others stated in their report that due to a lack of incremental information and high-frequency data showing a marked decline in overseas sales, investors are anchoring their expectations on the most negative data ahead of the earnings announcement and are generally adopting a bearish attitude. The overly high expectations of retail investors remain a significant downside risk, as they represent a large proportion of the shareholder structure. It is forecasted that sales in the first half of the year will grow by 29%, and net profit will increase by 18% to RMB 5.4 billion. It is expected that management will guide for sales in the second half to surpass those in the first half while maintaining a cautious outlook year-on-year. The "Overweight" rating is maintained, as the estimated compound annual growth rate of earnings from 2026 to 2028 is expected to reach 13%, driven mainly by a reacceleration of sales in overseas markets. Total sales are expected to resume growth in 2027. Note: Pop Mart will release its financial results this Thursday.