On Wednesday, UBS updated its financial outlook on Kanzhun Ltd. (NASDAQ: BZ), increasing the price target to $23.50 from the previous $22.00, while maintaining a Neutral rating on the stock. The revision reflects the company's sustained user growth and improved enterprise engagement in the first quarter, as well as expectations for continued momentum into the second quarter.
Kanzhun, known for its platform Boss Zhipin, has experienced a notable uptick in daily active users, with both bosses and enterprises reaching record highs. The blue-collar sector, particularly manufacturing and logistics, has been leading the recovery across industry verticals since the beginning of the year.
UBS forecasts that Kanzhun's cash billings will grow by 3.3% quarter-over-quarter in the second quarter, a slight adjustment to account for seasonal trends. However, the firm anticipates an accelerating year-over-year growth in the upcoming quarters. For the full year, UBS maintains its projection of a 31.0% year-over-year increase in cash billings, which is expected to support a revenue growth of 30.6% for 2024.
The firm also projects improvements in operating efficiency for Kanzhun, attributed to strong organic traffic growth and high marketing spend efficiency. Adjusted operating margin (OPM) estimates are set to reach 33.4% in the second quarter and 33.1% for the full year 2024.
InvestingPro Insights
InvestingPro data further substantiates UBS's positive outlook on Kanzhun Ltd., with a strong set of financial metrics underscoring the company's robust performance. The market capitalization stands at an impressive $9.76 billion, reflecting investor confidence in the firm's value and growth prospects. Kanzhun's revenue has seen a substantial year-over-year growth of 37.14% in the last twelve months as of Q1 2024, indicating the company's successful expansion and market penetration.
The platform's efficiency is highlighted by a gross profit margin of 82.63%, which showcases its ability to manage costs effectively while scaling its operations. This is complemented by an EBITDA growth of 2266.14%, a testament to Kanzhun's increasing profitability and operational excellence. Additionally, the stock's recent performance has been strong, with a 1-month price total return of 20.24% and a 3-month price total return of 46.24%, signaling robust market momentum.
InvestingPro Tips suggest taking a closer look at the company's PEG ratio, which at 0.07 indicates potential undervaluation relative to its earnings growth rate. Moreover, with the stock trading at 96.91% of its 52-week high and a fair value estimated by InvestingPro at $27.98, there may be room for price appreciation. For readers looking to dive deeper into Kanzhun's financials and uncover additional insights, InvestingPro offers 15+ InvestingPro Tips that could guide investment decisions. To access these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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