Morgan Stanley analyst Qianlei Fan maintained a Buy rating on ZTO Express today and set a price target of $24.60.
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Qianlei Fan has given his Buy rating due to a combination of factors that suggest a positive outlook for ZTO Express. One of the primary reasons is the expected turnaround in ZTO’s market share, which has been under pressure due to aggressive competition from smaller peers. The analyst anticipates that ZTO will significantly narrow its market share loss in the second quarter of 2025, with a projected year-over-year volume growth of 17.7%. This shift is attributed to smaller competitors losing momentum, likely due to cash flow and network pressures.
Furthermore, despite a forecasted drop in non-GAAP net profit for the second quarter of 2025, the analyst remains optimistic about ZTO’s future prospects. The revised earnings per share forecasts for 2025-2027 reflect a slightly slower-than-expected volume growth, yet the analyst has raised the price target to $24.60, implying a 16x 2025 estimated P/E ratio. This is higher than the domestic peers’ average, highlighting ZTO’s market leadership. The analyst believes that as the market gains confidence in ZTO’s mid-term earnings growth potential, the company’s valuation could improve, making it a favorable investment opportunity.