On Monday, Citi updated its outlook on Mercari, Inc (4385:JP) (OTC: MRCIF) shares by increasing its price target to JPY3,500 from the previous JPY3,300. The firm continues to endorse a Buy rating for the company's stock.
Citi's evaluation indicates optimism for Mercari's growth potential, particularly as it transitions into an operating profit (OP) growth phase in the fiscal year ending June 2025.
According to Citi, the uptick in Mercari's Gross Merchandise Value (GMV) is propelled by expansion into new market segments such as cross-border e-commerce and business-to-consumer (B2C) operations.
This growth has reportedly surpassed market forecasts, as some external monthly GMV data does not account for these emerging segments. Citi anticipates that Mercari will successfully manage the initial costs associated with these ventures.
In addition to the marketplace business, Mercari's fintech sector is also experiencing rapid sales growth. Citi projects that this division is on track to become profitable by the second quarter of the fiscal year ending June 2025.
Furthermore, Mercari has hinted at a possible strategic shift in its U.S. operations, details of which are expected to be clarified in the company's full-year results.
Citi's report also notes a disciplined approach in Mercari's recent cost strategy, which could be a factor in the company's ability to offset the upfront investments required for expansion.
The firm's comprehensive analysis supports the maintained Buy rating, reflecting confidence in Mercari's financial trajectory and strategic initiatives.
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