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On Wednesday, Citi maintained a Buy rating on Full Truck Alliance Co. Ltd. (NYSE:YMM) and increased the price target to $13.00 from $12.00. The adjustment follows Full Truck Alliance's third-quarter 2024 results, which surpassed expectations in revenue and earnings, along with maintaining consistent order volume.
The company reported a strong performance for the third quarter of 2024, with order volumes aligning with predictions. Citi's analysis indicates that Full Truck Alliance's commission revenue growth could slightly exceed prior forecasts for the fourth quarter of 2024, due to improved take rates and a projected 20% year-over-year increase in order volume. The company is also expanding its market share in the brokerage business and is working on raising take rates to manage volume growth, contributing to better-than-expected brokerage growth.
Citi has raised its net profit margin (NPM) forecast for Full Truck Alliance in the fourth quarter of 2024 to 32%, up from the previous estimate of 30%. This revision is based on the company's strong top-line performance and the potential for further upside due to considerable operating leverage stemming from commission revenues.
In light of the robust fundamentals and clear earnings visibility, despite macroeconomic challenges, Citi has increased its earnings estimates for Full Truck Alliance for the years 2024, 2025, and 2026 by 7%, 3%, and 2% respectively. The new price target of $13 reflects the company's stronger than anticipated revenue performance and Citi's confidence in the company's ongoing success.
In other recent news, Full Truck Alliance Co. Ltd. announced robust third-quarter results, with earnings and revenue surpassing analyst expectations. The digital freight platform reported adjusted earnings per ADS of RMB1.18 ($0.17), exceeding the consensus estimate of RMB0.93. Revenue saw a significant year-over-year increase of 33.9% to RMB3.03 billion ($432 million), also beating expectations of RMB2.75 billion. The strong performance was largely driven by a 22.1% increase in fulfilled orders and a 33.6% rise in average shipper monthly active users. Furthermore, transaction service revenue saw the highest growth at 68.6% year-over-year. As for future expectations, Full Truck Alliance forecasts fourth-quarter revenue to fall between RMB2.94 billion and RMB3.00 billion, above the RMB2.73 billion analyst consensus. These are among the recent developments for the company.
InvestingPro Insights
Full Truck Alliance's recent performance aligns with Citi's positive outlook, as reflected in InvestingPro data and tips. The company's revenue growth of 29.48% over the last twelve months and an impressive 34.06% quarterly growth in Q2 2024 underscore its strong market position. This growth is complemented by a robust gross profit margin of 81.46%, supporting Citi's optimistic revenue forecasts.
InvestingPro Tips highlight Full Truck Alliance's financial strength, noting that it "holds more cash than debt on its balance sheet" and has "liquid assets exceed short term obligations." These factors contribute to the company's ability to invest in growth initiatives and navigate potential economic challenges.
The company's profitability is further emphasized by InvestingPro Tips, which indicate that Full Truck Alliance has been "profitable over the last twelve months" and "analysts predict the company will be profitable this year." This aligns with Citi's increased net profit margin forecast and raised earnings estimates.
For investors seeking more comprehensive analysis, InvestingPro offers 7 additional tips for Full Truck Alliance, providing deeper insights into the company's financial health and market position.
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