On Friday, Macquarie analyst Aditya Suresh adjusted the price target for MakeMyTrip (NASDAQ:MMYT), increasing it to $105.00 from the previous target of $74.00. The company, currently valued at $12.33 billion, trades at a P/E ratio of 53.4x, and according to InvestingPro analysis, appears to be trading above its Fair Value. Despite the significant change in the price target, the firm has decided to maintain a Neutral rating on the shares.
Suresh's commentary highlighted the positive structural tailwinds anticipated to propel MakeMyTrip's revenue growth at a high-teens compound annual growth rate (CAGR), building on its impressive 28.95% revenue growth over the last twelve months.
Additionally, a trend towards premiumisation in the bookings mix was noted as a contributing factor. The analyst's decision to raise the target price to $105 is based on a shift from a discounted cash flow (DCF) model to a relative value-based target price-to-earnings (PE) multiple. This multiple is set at 50 times the fiscal year 2027 estimated earnings.
The revision in the price target follows a considerable appreciation in MakeMyTrip's share price, which has seen approximately a threefold increase since August 2023. The analyst mentioned that in light of this recent surge in share price, a stronger growth trajectory in the hotel segment would be required to justify further buying of the stock.
MakeMyTrip, an online travel company, is poised to benefit from these identified trends, which are expected to support its growth in the coming years. The new price target reflects Macquarie's revised valuation method and outlook for the company's financial performance.
In other recent news, online travel company MakeMyTrip has been demonstrating robust financial performance. The company reported a 22% year-over-year top-line growth in its recent quarterly results, with revenues increasing due to a 20% growth in both flights and hotels segment revenues.
The second-quarter EBITDA was reported at $32.7 million, and net income was recorded at $18 million. BofA Securities, JPMorgan, and Goldman Sachs have all maintained a positive stance on MakeMyTrip, with BofA Securities increasing the price target on the company's shares to $130.00 from the previous target of $119.00.
The company also announced a share buyback program of $150 million, a strategic move that BofA Securities suggests could provide a safety net for MakeMyTrip's stock price. In addition, the company's gross bookings saw a significant increase, reaching a value of $2.3 billion. The adjusted operating profit also rose by 33% to $37.5 million.
These developments underscore the company's strong financial performance and promising growth prospects. MakeMyTrip is also making inroads into corporate travel and servicing small travel agents, broadening its market focus. The company's commitment to maintaining stable rates across its services is part of its strategy to position itself as a mainstream volume provider.
Despite potential challenges such as heavy rainfall and geopolitical tensions, MakeMyTrip continues to show promising growth, maintaining a strong cash position and planning for share buybacks.
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