- The stock price of Momo Inc (NASDAQ: MOMO) received a price target of $19.30 by Citi. These are the details.
The stock price of Momo Inc (NASDAQ: MOMO) received a price target of $19.30 by Citi. And analyst Yiwen Zhang upgraded the shares from Neutral to Buy.
Zhang cited the company’s earnings. And Zhang believes that quarterly live-streaming revenue will bottom out this quarter. The segment is expected to begin recovery in Q2.
And Zhang also noted that the adjusted profit was due to better gross margins and operational cost savings.
“Momo’s 4Q20 rev was RMB3.80bn (+1% qoq or -19% yoy), 2%/3% ahead of our/consensus of RMB3.71bn/3.68bn. Adj. net profit was RMB836mn, 33%/35% above our/consensus, driven by better gross margin, opex savings and reverse of over-accrued tax expense. The company guided 1Q21 rev at RMB3.36-3.46bn (3.7%-6.5% yoy decline), with the mid-point 3% above consensus. Current market cap excluding net cash implies 2.5x 2022E P/E, pricing in the continued rev decline. We expect core Momo quarterly live streaming rev to bottom out in 1Q21E and model a qoq recovery starting from 2Q21E (+7%/+3%/+5% qoq for 2Q/3Q/4Q21E). Hence upgrade to Buy/1H on cheap valuation relative to peers and catalyst on core Momo live streaming rev qoq rebound from 2Q21E. We lift SOTP-based TP to US$19.3. Downside risks include 1) decreasing MAU/ user engagement; 2) worse-than-expected regulation limitation on tipping amount,” wrote Citi analyst Hillman Chan in a research report via Street Insider.
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