On Monday, Citi has increased the price target for Full Truck Alliance Co. Ltd. (NYSE:YMM) shares to $15.00, up from the previous $13.00, while maintaining a Buy rating.
The firm bases its decision on several factors that signal potential for the company's re-rating. These include a positive outlook for the fourth quarter of 2024 and the full year of 2025, driven by multiple factors supporting revenue growth, particularly through improved commission rates.
The analyst highlighted Full Truck Alliance's ability to maintain robust order volume growth despite broader economic challenges. This resilience is expected to result in year-over-year growth slightly over 20% for the fourth quarter of 2024. Additionally, the company is anticipated to benefit from government policies, given its involvement in key sectors such as building materials, food and beverage, and agriculture.
Citi's optimism extends to the company's revenue drivers, expecting a more aggressive increase in take rates starting from 2025. In light of these factors, the firm has revised its earnings estimates for Full Truck Alliance upwards by 0% for 2024, and 2% for both 2025 and 2026. The revised price target also reflects an increase in the target Price-to-Earnings (PE) ratio to 22 times from the prior 20 times, suggesting confidence in the company's growth trajectory and earnings visibility.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.