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Investing.com - Benchmark lowered its price target on Meituan Dianping (HK:3690) (OTC:MPNGF) to HK$145.00 from HK$165.00 on Thursday, while maintaining a Buy rating on the Chinese food delivery and local services giant. The company, currently trading near its 52-week low and showing a 26.5% decline over the past six months, maintains strong fundamentals with a healthy current ratio of 2.09 and robust revenue growth of 20.4% in the last twelve months.
The price target reduction comes as Meituan faces intensifying competitive pressure in its core local commerce business from Alibaba and JD.com, which are aggressively expanding through subsidies in food delivery and on-demand retail segments. Despite these challenges, InvestingPro analysis shows the company maintains a strong financial health score of 3.2 (GREAT), with more cash than debt on its balance sheet.
Despite Meituan’s continued leadership in user experience and unit economics, Benchmark noted that the evolving pricing environment has resulted in margin compression and slower revenue growth in the second quarter. According to InvestingPro data, three analysts have recently revised their earnings expectations downward for the upcoming period.
The research firm has revised down its fiscal year 2025 and 2026 revenue and margin estimates for Meituan’s core local commerce business, reflecting a weaker outlook amid limited visibility into coming quarters.
Benchmark analysts believe the current pricing war is unsustainable but acknowledge it may take time for competitive pressures to ease, with Meituan’s normalized growth and unit economics expected to reset lower while remaining stronger than near-term turbulence suggests.
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