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Investing.com - BofA Securities has raised its price target on ZTO Express (NYSE:ZTO) to $22.00 from $19.00 while maintaining a Neutral rating on the stock. The company, a prominent player in China’s Air Freight & Logistics industry, currently trades at an attractive P/E ratio of 12x and shows strong financial health according to InvestingPro analysis.
The adjustment comes after ZTO Express reported second-quarter 2025 adjusted net profit of RMB2.03 billion, representing a 28% year-over-year decline. This figure fell 10% below BofA’s estimate and 13% below consensus expectations. Despite the quarterly decline, the company maintains solid fundamentals with $1.29 billion in net income over the last twelve months and 14.76% revenue growth.
BofA analyst Fan Tso lowered fiscal year 2025 core EPS estimates by 7%, citing higher key account costs and lower volume growth projections for the Chinese logistics company.
Despite the near-term adjustment, BofA increased its fiscal year 2026-2027 core EPS estimates by 1-3%, based on higher average selling price (ASP) assumptions for the company’s services.
The analyst noted that management believes express delivery will be priced on a cost-plus basis, reflecting the industry’s anti-involution initiatives that aim to establish more sustainable pricing models. InvestingPro analysis suggests the stock is currently undervalued, with multiple additional insights and a comprehensive Pro Research Report available for subscribers looking to dive deeper into ZTO’s financial outlook.
In other recent news, ZTO Express reported its second-quarter earnings, which did not meet analyst expectations. The company posted adjusted earnings per American Depositary Share (ADS) of RMB2.48, equivalent to $0.35, falling short of the analyst estimate of RMB2.89. Revenue for the quarter increased by 10.3% year-over-year to RMB11.83 billion, or $1.65 billion, but this also missed the consensus estimate of RMB12.28 billion. Despite the revenue increase, ZTO Express faced challenges in market conditions, although it experienced strong parcel volume growth. These developments highlight the company’s ongoing efforts to navigate a competitive environment while managing margin pressures. Analyst firms have not provided an upgrade or downgrade in response to this financial report. Investors will likely be paying close attention to how ZTO Express addresses these challenges moving forward.
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