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On Thursday, Benchmark analysts reiterated a Buy rating on Momo Inc . (NASDAQ:MOMO) with a consistent price target of $13.00. Currently trading at $6.91, the stock shows attractive valuation metrics with a P/E ratio of 9.65. The firm’s analysts highlighted Momo’s fourth-quarter results, which showcased revenue surpassing expectations, though profits did not meet forecasts, attributed mainly to one-time factors. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation. The analysts anticipate a gradual improvement in the company’s fundamentals during the fiscal year 2025, propelled by the stabilization of the core Momo app and the continued success of its international applications.
The analysts pointed out that new apps such as Yaahlan and Amar in the Middle East, as well as the ongoing expansion of Soulchill, are expected to be significant contributors to growth in FY25 and beyond. Despite Tantan’s challenges, with its operations being scaled back for profitability, the analysts believe the mix of a steady domestic business and robust international growth could lead to positive revenue trends in the latter half of FY25. InvestingPro data shows the company maintains a GOOD overall financial health score, suggesting strong operational fundamentals.
Benchmark’s analysis suggests that while investments and operational leverage might impact margins, profitability is projected to reach its lowest point in FY25. This projection takes into account the potential effects of a share reduction, which exceeded 9% in FY24 due to buybacks. Additionally, Momo announced a $50 million special cash dividend per American Depositary Share (ADS) and increased its share repurchase program by $200 million. With analyst targets ranging from $7.02 to $13.03, detailed valuation analysis is available in the comprehensive Pro Research Report on InvestingPro.
The company’s strong financial position, with $8.02 in net cash per share and current free cash flow of $149.85 million, underpins Benchmark’s view of Momo as a deep value investment opportunity. The analysts expect a fundamental recovery with positive revenue and earnings growth, particularly in the second half of FY25, which they believe will be a pivotal catalyst for the stock. Their maintained Buy rating and price target reflect this optimistic outlook. Discover more detailed metrics and 14 additional ProTips about MOMO’s financial health and growth prospects on InvestingPro.
In other recent news, Hello Group Inc. reported its fourth-quarter 2024 earnings, showcasing mixed results. The company achieved a revenue of 2.64 billion, surpassing the forecast of 2.6 billion. However, earnings per share (EPS) fell short, coming in at 1.3 compared to the expected 1.56. Despite the revenue beat, the stock reacted negatively, reflecting investor disappointment over the EPS miss. Analysts from CICC and Jefferies raised questions about the company’s strategic adjustments and growth potential in overseas markets. Additionally, Hello Group is focusing on expanding its overseas business, particularly in the MENA region, with new apps like Yahaland and Amar showing promising growth. The company projects its first-quarter 2025 revenue to be between 2.4 billion and 2.5 billion, with a focus on cost optimization and expanding its international presence. These developments highlight the company’s ongoing efforts to navigate macroeconomic challenges and regulatory changes while seeking growth opportunities abroad.
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