On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Grab Holdings Inc. (NASDAQ:GRAB), increasing the price target to $6.00, up from the previous $5.00, while reaffirming an Outperform rating on the stock. This adjustment comes in response to the company's recent performance, which the analyst described as a "clean beat."
The positive revision was attributed to a combination of factors, including the growing adoption of premium and affordability products offered by Grab, as well as a robust inbound travel activity observed during the summer quarter. These elements contributed to the company's EBITDA surpassing expectations by approximately 40%.
The analyst's outlook remains optimistic regarding the sustainability of these trends into the fourth quarter, noting that the potential negative impacts from a recent typhoon seem less significant than initially anticipated. The success of Grab's new products has reinforced confidence in the company's potential to accelerate market share gains in the forthcoming quarters while simultaneously achieving steady margin growth.
In light of the improved business outlook, Mizuho has also revised its FY26 EBITDA estimate for Grab upwards by 10%. The firm continues to hold Grab as a top pick within the Asia Internet sector, anticipating further positive developments for the company.
In other recent news, Grab Holdings has reported a robust third quarter performance with significant growth in Gross Merchandise Volume (GMV), revenue, and EBITDA. Following this, Barclays (LON:BARC), Evercore ISI, and Citi have revised their outlooks on the company, maintaining positive ratings and increasing their price targets. Barclays raised its target to $5.50, Evercore ISI to $8.00, and Citi to $5.90. Analysts have attributed Grab's strong performance to increased Monthly Transaction (JO:TCPJ) Users (MTU), product enhancements, and effective incentives leverage.
Grab's management is also considering an increase in the buyback program from the current $500 million, signaling confidence in the company's financial health. The company's success in diversifying its products and services, particularly in the fintech sector, has contributed to its optimistic growth outlook leading up to 2025. This includes the launch of lending products in all three markets, which saw a 38% rise in loan dispersals year-on-year.
Recent developments have shown Grab's ability to maintain healthy free cash flow and operating efficiency, reinforcing confidence in the company's sustainable profitability trend. Despite intense competition in Indonesia, Grab continues to report positive EBITDA and revenue growth.
InvestingPro Insights
Grab Holdings Inc.'s recent performance, which Mizuho Securities described as a "clean beat," is reflected in the company's financial metrics and market performance. According to InvestingPro data, Grab has shown impressive revenue growth of 30.77% over the last twelve months, with quarterly revenue growth of 17.11% in Q2 2024. This aligns with the analyst's positive outlook on the company's market share gains and margin growth.
The market has responded favorably to Grab's performance, with InvestingPro data showing a strong 34.36% price return over the last three months and a 33.94% return over the past year. The stock is currently trading near its 52-week high, with a price that is 98.65% of its highest point in the past year.
InvestingPro Tips highlight that Grab holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, suggesting a solid financial position. However, it's worth noting that the company is not yet profitable over the last twelve months, which is consistent with the analyst's focus on EBITDA improvements rather than current profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Grab Holdings Inc., providing a deeper understanding of the company's financial health and market position.
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