Nomura lowers Weibo's target price to $10, indicating that the advertising business seems to have bottomed out

Nomura published a research report indicating that Weibo-SW (09898.HK)(WB.US) exceeded profit expectations in the first quarter, with total revenue of USD 397 million remaining flat year-on-year, roughly in line with expectations; non-GAAP operating profit increased by 3%, surpassing market forecasts by 7%. As for the guidance for the second quarter, it aligns with market expectations, with Weibo anticipating total revenue to remain flat year-on-year and a non-GAAP operating profit margin between 33% and 34%.

The firm continued to state that Weibo's advertising business seems to have bottomed out, but due to changes in the market environment, the long-term outlook remains unclear. However, Weibo's management has a slightly more positive view on advertising prospects (compared to previous earnings calls) and maintains its full-year revenue guidance, expecting moderate growth in business revenue in RMB terms for the entire year.

The firm has lowered its target price for Weibo's U.S. stock from USD 11.2 to USD 10, maintaining a "Neutral" rating