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Investing.com - JPMorgan has initiated coverage on Chagee Holdings (NASDAQ:CHA) with an Underweight rating and a $14.20 price target, approximately 7% below the current trading price of $15.32. The stock has already fallen 52.77% year-to-date, trading near its 52-week low of $14.24.
The premium tea drinks brand, founded in 2017, has expanded to 7,000 teahouses globally as of June 2025, with 6,800 locations in China and 208 stores in international markets.
Chagee’s same-store sales growth (SSSG) has significantly decelerated from 95% year-over-year in 2023 to just 2.7% in 2024, before turning negative with -18.4% in the fourth quarter of 2024 and worsening to -23% in the second quarter of 2025.
JPMorgan notes that Chagee is currently in a transition period with deteriorating store unit economics in China while accelerating its international expansion.
The stock has traded at 14 times 12-month rolling price-to-earnings ratio since its March 2025 listing, but has experienced a de-rating from over 20 times to the current P/E of 12.34 following disappointing second-quarter results and guidance cuts. Despite the selloff, InvestingPro data suggests Chagee is slightly undervalued with a "GREAT" overall financial health score of 3.4. Investors should note Chagee reports earnings in 14 days (November 28), which could be a catalyst for the stock.
In other recent news, Macquarie has initiated coverage on Chagee Holdings with a Neutral rating. The research firm has set a price target of $19.00 for the company. Macquarie highlighted that Chagee has successfully leveraged the "China-chic trend" by providing premium quality original leaf tea drinks at affordable prices ranging from Rmb15-20. These developments offer a perspective on Chagee’s market positioning and potential future performance. Investors may find this information useful as they consider their investment strategies.
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