On Wednesday, Coupang Inc (NYSE:CPNG) saw its stock price target increased by Mizuho (NYSE:MFG) from $23.00 to $25.00, while the firm kept a Neutral rating on the stock. The adjustment follows Coupang's recent financial report, which showcased significant top-line growth and a notable EBITDA beat.
The e-commerce giant reported a 32% growth in top-line revenue, excluding Farfetch (OTC:FTCHQ), attributed to its strong logistics capabilities that have helped the company expand its market share. Moreover, investments in the company are paying off as Farfetch achieved EBITDA break-even earlier than anticipated, and other areas such as Taiwan and Eats are also seeing reduced losses.
Coupang's management has confirmed that revenue guidance remains in the low twenties percentage for FY24, with expected EBITDA losses for developing offerings, excluding Farfetch, at around $650 million. Based on these developments, Mizuho has revised its FY26 estimate upwards by 4% to $3.2 billion.
The price target increase reflects a 15x multiple on the firm's FY26 EBITDA forecast. Despite the upgrade, Mizuho maintains a Neutral stance on Coupang's shares, citing concerns over the company's valuation premium, regulatory uncertainties, and potential challenges related to its investor, Softbank (OTC:SFTBY). Nevertheless, the firm acknowledges a growing positive sentiment towards Coupang's leading position in its category.
In other recent news, Coupang Inc. reported impressive financial developments, with third-quarter earnings and revenue surpassing analyst expectations. The company's adjusted earnings per share came in at $0.06, beating the projected $0.01.
Furthermore, revenue for the quarter reached $7.87 billion, exceeding the consensus estimate of $7.77 billion, marking a 27% increase year-over-year. In particular, Coupang's Product Commerce segment saw net revenues rise by 16% year-over-year to $6.9 billion.
Amidst these developments, Deutsche Bank (ETR:DBKGn) raised its price target on Coupang shares to $26.50, maintaining a Hold rating. Concurrently, Citi maintained a Buy rating, raising the share price target to $31.00, expressing optimism on Coupang's long-term growth despite near-term margin pressures.
In terms of market dynamics, Coupang's initiatives have contributed to growth in the food and beverage and food services sectors. The company's strategic moves have not only helped expand the market but also pressured domestic competitors. These are recent developments for Coupang, which continues to display strong financial performance despite near-term challenges.
InvestingPro Insights
Coupang's recent performance and Mizuho's price target increase are further supported by real-time data from InvestingPro. The company's Market Cap stands at $48.23 billion, reflecting its significant presence in the e-commerce sector. Coupang's revenue growth remains strong, with a 23.18% increase over the last twelve months as of Q2 2024, aligning with management's guidance of low twenties percentage growth for FY24.
InvestingPro Tips highlight Coupang's financial strength, noting that the company "holds more cash than debt on its balance sheet." This solid financial position supports Coupang's ability to invest in growth initiatives and emerging markets. Moreover, the tip that "analysts anticipate sales growth in the current year" corroborates Mizuho's positive outlook on the company's top-line performance.
It's worth noting that Coupang is trading at a P/E ratio of 45.54, which InvestingPro characterizes as "trading at a high earnings multiple." This valuation metric aligns with Mizuho's cautious Neutral rating due to the company's valuation premium.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Coupang, providing a deeper understanding of the company's financial health and market position.
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