Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Wednesday, Citi analyst Alicia Yap increased the price target for Full Truck Alliance Co. Ltd. (NYSE:YMM) shares to $16.50, up from the former $16.00, while maintaining a Buy rating on the stock. The revision follows Full Truck Alliance’s fourth-quarter results for 2024, which showcased significant growth in order volume and revenues. According to InvestingPro data, the company has demonstrated impressive financial performance with a 31.72% revenue growth and maintains industry-leading gross profit margins of 80.61%.
Yap’s analysis indicates that Full Truck Alliance is expected to continue its growth trajectory into 2025, with plans to enhance its monetization capabilities. The company anticipates an adjusted operating profit growth exceeding 60% year-over-year, propelled by consistent order volume increases, higher take rates, and commission penetration, alongside diligent cost management. With a market capitalization of $12.2 billion and an overall "GREAT" financial health score from InvestingPro, the company shows strong fundamentals. Subscribers can access 12 additional exclusive ProTips and comprehensive financial metrics through the Pro Research Report.
Despite potential uncertainties surrounding rebate rates, Full Truck Alliance intends to regulate the volume of its brokerage business and is likely to increase the take rate to between 7% and 8% in 2025. This strategy is expected to slow total revenue growth but should not affect the company’s profit momentum.
Citi has adjusted its earnings estimates for Full Truck Alliance upward by 13% for 2025 and by 11% for 2026. These adjustments reflect a more rapid advancement in commission ramp-up and more effective operating expense control than initially anticipated.
Yap reiterates a Buy rating on Full Truck Alliance stock, emphasizing the company’s strong commission revenue momentum and its potential for long-term growth, along with its commendable operating leverage. The revised price target of $16.50 from the previous $15.00 is indicative of Citi’s confidence in the company’s financial outlook and strategic initiatives.
In other recent news, Full Truck Alliance Co. Ltd. reported fourth-quarter results that exceeded analyst expectations for both revenue and non-GAAP operating profit. Jefferies analyst Thomas Chong responded by raising the price target to $14.50 and maintaining a Buy rating, citing the company’s strategic shift towards high-margin business areas. HSBC also initiated coverage with a Buy rating and a higher price target of $18.00, highlighting the potential for earnings upside and effective use of offshore cash reserves. Citi reaffirmed its Buy rating, increasing the price target to $15.00, based on anticipated robust fourth-quarter results for 2024 and strong commission revenue growth. However, JPMorgan downgraded Full Truck Alliance from Overweight to Neutral, despite increasing the price target to $13.00, due to concerns about the stock’s high valuation compared to its sector peers. JPMorgan noted the company’s resilience amid economic challenges and raised earnings estimates for fiscal years 2024 to 2026. Citi further emphasized Full Truck Alliance’s potential for re-rating, driven by improved commission rates and government policy support, leading to a revised price target and sustained optimism.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.