On Thursday, Citi reaffirmed its positive stance on Full Truck Alliance Co. Ltd. (NYSE:YMM), maintaining a Buy rating along with a price target of $15.00. The brokerage firm views any recent decline in the company's share price as a chance to strengthen a long-term investment position. Citi's endorsement comes with the expectation of Full Truck Alliance delivering robust fourth-quarter results for 2024, driven by commission revenues and a potential outperformance of consensus earnings estimates.
The analyst at Citi predicts that Full Truck Alliance will experience year-over-year order volume growth exceeding 20% in the fourth quarter of 2024. This growth is anticipated to be supported by an increase in commission rates. Despite potential concerns regarding the growth of order volume in 2025, Citi believes that the momentum will likely continue to be strong. The firm's estimates suggest a high teens year-over-year growth in order volume, which is considered reasonable due to the increasing online penetration.
Full Truck Alliance's current trading multiple is higher than that of most of its peers in the internet and logistics sectors. However, Citi justifies this premium valuation based on the company's leading position in the industry and its solid fundamental momentum. The price target of $15 implies a 22 times multiple on the firm's projected earnings for 2025, which Citi deems reasonable in light of an anticipated 25% earnings growth, along with the potential for earnings to surpass their estimates.
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