On Wednesday, Citi reaffirmed its positive stance on Grab Holdings Inc. (NASDAQ:GRAB), maintaining a Buy rating and a price target of $5.90 for the company's shares. The endorsement follows a recent investor call with Grab's Director of Strategic Finance & IR, Mr. Douglas Eu, which took place on Sunday, where several key topics were discussed.
The conversation with Mr. Eu highlighted Grab's growth in on-demand Monthly Transacting Users (MTUs) and its efforts in cross-selling. The company's premium services, competition, and supply issues within the Mobility sector were also points of focus.
Additionally, trends in the Deliveries segment, including advertising and efficiency improvements, were examined. InvestingPro analysis shows the company maintains a "GOOD" financial health score, supported by strong revenue growth of 21.65% and a healthy current ratio of 2.7.
Looking ahead, 2025 is anticipated to be a pivotal year for Grab's Digital Financial Services (DFS). While InvestingPro data indicates the company is not yet profitable, with an EBITDA of -$70M in the last twelve months, Citi's analysis, based on the company's third-quarter performance, suggests that Grab's early investments in diversifying its products and services are yielding positive results.
Citi's outlook is buoyed by the low penetration of MTUs, combined with increasing transaction frequency and spending per user. This dynamic is expected to enhance synergies across Grab's food, mart, delivery, and mobility services. The firm's ability to maintain a healthy free cash flow and operational efficiency supports the expectation of a sustainable profitability trend for Grab.
In summary, Citi's commentary underscores its confidence in Grab's growth trajectory leading into 2025, backed by the company's strategic initiatives and financial discipline. The maintained Buy rating and price target reflect this optimistic view of Grab's future performance.
In other recent news, Grab Holdings has seen a series of rating changes and price target adjustments from various investment firms.
BofA Securities downgraded Grab's rating from Buy to Underperform, despite the company's strong third-quarter performance, citing a shift in risk-to-reward balance following a significant rise in stock price.
However, Loop Capital, Deutsche Bank (ETR:DBKGn), and Mizuho (NYSE:MFG) Securities have maintained positive stances on Grab, raising their price targets to $5.75, $6.00, and $6.00 respectively, in light of the company's robust earnings and revenue results.
Grab's third-quarter performance exceeded expectations, with a 4.7% revenue beat and a 37% adjusted EBITDA beat. The company's management projects full-year 2024 EBITDA between $308 million and $313 million. Furthermore, Grab's lending products, launched in all three markets, saw a 38% rise in loan dispersals year-on-year.
Grab Holdings is also considering an increase in its buyback program from the current $500 million, signaling confidence in the company's financial health. Despite intense competition in Indonesia, Grab continues to maintain positive EBITDA and revenue growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.