Shares of Meituan Dianping (HK:3690) soared over 12% today after the company reported strong revenue growth amid concerns about a slump in China’s economy. The company’s revenue grew 21% year-over-year to ¥82.3 billion in Q2. This also surpassed the average analyst estimate of ¥81 billion complied by LSEG (London Stock Exchange Group).
Based in China, Meituan is an e-commerce platform that offers a wide range of products and services, including food delivery, entertainment, and travel.
Meituan Delivers Resilient Performance
Meituan delivered a resilient performance in Q2, sending a positive signal to investors despite the challenging landscape for domestic consumer spending. Revenue from its Core Local Commerce segment, which includes food delivery and Meituan Instashopping, increased 18.5% to ¥60.7 billion.
Citi analysts highlighted in their post-earnings report that Meituan’s performance confirms its effective execution and operational efficiency in navigating macroeconomic challenges.
Meituan’s Q2 total segment operating profit surged to ¥13.9 billion from ¥5.9 billion a year ago. Further, its total segment operating margin grew from 8.7% to 16.9%.
Additionally, the company revealed a $1 billion share buyback, demonstrating its confidence in future prospects.
Analysts React Positively to Meituan Results
Post-results, analyst Ronald Keung from Goldman Sachs increased his price target from HK$148 to HK$157 and maintained a Buy rating on Meituan stock. He sees an upside of over 50% in the share price.
Similarly, Bernstein raised its price target on the stock from HK$130 to HK$135, while maintaining a Buy rating.
Meanwhile, DBS analyst Tsz Wang also reiterated a Buy rating and predicted 35% upside potential for the share price.
Is Meituan Stock a Buy?
On TipRanks, 3690 stock has received a Strong Buy consensus rating based on 11 Buys and one Sell recommendation. The Meituan share price target is HK$147.73, which reflects a growth of 44% on the current trading price.
