Analyst Fan Tso of Bank of America Securities reiterated a Hold rating on ZTO Express, reducing the price target to $20.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Fan Tso has given his Hold rating due to a combination of factors impacting ZTO Express. The company’s volume growth has decelerated, with express delivery volume growth slowing to approximately 10% year-over-year in August, compared to 15% in July. This slowdown is attributed to anti-involution initiatives and price-floor policies affecting light and low-average selling price parcels in high-volume regions. Consequently, Fan Tso adjusted the fiscal year 2026-2027 earnings per share estimates by -3% to +3% to account for the slightly reduced volume growth and the impact of ZTO’s repurchase of its convertible notes.
Fan Tso also lowered the price objective for ZTO Express by 9% to $20, reflecting a valuation based on a price-to-earnings ratio of 13 times the fiscal year 2026 estimate, which is below the historical average. Despite ZTO’s strong unit net profit performance, the lack of immediate consolidation opportunities in the market and the potential for renewed price competition pose challenges. Additionally, while ZTO is focused on increasing its market share, the decline in net profit per parcel for reverse logistics could pressure margins. These elements contribute to the reaffirmation of a Neutral rating for ZTO Express.
ZTO’s price has also changed moderately for the past six months – from $20.800 to $18.340, which is a -11.83% drop .