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Investing.com - Macquarie initiated coverage on Chagee Holdings (NASDAQ:CHA) with a Neutral rating and a $19.00 price target on Friday. The stock, currently trading at $17.84, appears undervalued according to InvestingPro analysis, with analyst targets ranging from $22.71 to $38.51.
The research firm noted that Chagee has capitalized on the "China-chic trend" by offering original leaf tea drinks with premium quality at affordable prices between Rmb15-20.
Macquarie pointed out that while Chagee’s signature product, Jasmine Green Tea Latte, previously drove success for the brand, its over-reliance on a single-product category has gradually weakened its competitiveness against value-for-money players such as RTD milk teas and lower-price-point tea-house competitors.
The company operates more than 7,000 stores as of the first half of 2025, primarily in shopping malls, but Macquarie observed that prime locations with strong traffic in higher-tier cities are becoming saturated, while Chagee’s premium positioning and large capital expenditure per store limits its ability to expand into lower-tier cities.
Macquarie projected that Chagee’s currently weak same-store sales growth will likely lead to moderated store expansion, forecasting a low-teen store expansion pace in 2026 compared to 83% in 2024.
In other recent news, Chagee Holdings has been the focus of analyst attention, with both Citi and Deutsche Bank weighing in on the company’s prospects. Citi has maintained its Buy rating for Chagee, setting a price target of $43.70. This decision is influenced by the potential benefits Chagee might reap from increased subsidy competition in the food delivery sector, as Taobao Shangou recently upped consumer subsidies for these services. Meanwhile, Deutsche Bank has initiated coverage on Chagee with a Buy rating and a price target of $40.50. The bank highlights Chagee’s strong position in the rapidly growing premium milk tea market in China, which has seen a significant increase in tea drink stores from 2019 to 2024. These developments underscore the positive outlook analysts have for Chagee’s growth and market position. Investors will likely keep a close watch on how these factors influence Chagee’s future performance.
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