Morgan Stanley's report indicates that it has revised down the advertising revenue forecast for Weibo-SW (09898.HK) (WB.US) for the fiscal years 2024 to 2026 by 2% to 4%, mainly due to weakened macroeconomic and consumer sentiment in China. The upward potential brought by the Olympics in the third quarter of this year may be limited. Therefore, the bank has revised down the earnings per American depositary share (EPADS) forecast for Weibo's fiscal years 2024 to 2026 by 3% to 7%, and lowered the target price from $8.5 to $8.
The bank believes that despite Weibo's lower valuation and a potential dividend yield of over 10%, downward risks to earnings per share exist due to weakened macroeconomic conditions and declining market share. Therefore, the bank maintains its 'shareholding' rating on Weibo.